Fitch warns Japan credit rating at risk from debt

TOKYO — Fitch Ratings warned Thursday that Japan's credit rating could worsen if Tokyo does not rein in snowballing debt and put the world's second-largest economy on the path to a sustainable recovery.

Japan is already one of the most indebted countries in the world, and the agency said further fiscal deterioration would put pressure on the nation's sovereign debt rating. Fitch rates Japan's local currency debt at AA-, the fourth-highest ranking.

"In the absence of sustained economic recovery and fiscal consolidation, government debt will continue to rise, placing downwards pressure on sovereign credit and ratings over the medium term," Fitch said in a statement.

Fitch said Japan's government debt reached 201 percent of its gross domestic product in 2009.

The warning came as Japan's government is to announce a fiscal consolidation plan in June.

When Prime Minister Yukio Hatoyama came to power in September last year, he promised to trim Japan's ballooning government debt.

But his government will issue a record 44 trillion yen ($473 billion) in bonds to fund a budget for the current fiscal year starting in April, raising fresh concern over Japan's already tattered finances.

The agency's focus on Japan's massive debt came as Greece's debt crisis has rattled global financial markets. Greece began talks Wednesday with the IMF, the European Central Bank and the European Commission on details of a rescue package to deal with its debt crisis.