INTERVIEW-Japan's power problems raise fiscal uncertainty-Moody's

by Reuters
Tuesday, 3 May 2011 09:36 GMT

HANOI, May 3 (Reuters) - Japan's power supply disruptions after the Fukushima nuclear crisis and possible government assistance for the plant operator are big sources of uncertainty for the nation's fiscal health, a senior official of Moody's Investors Service said on Tuesday.

While economic costs for disaster relief and reconstruction following the March 11 earthquake and tsunami are likely to be about 3 to 5 percent of Japan's gross domestic product (GDP), "there is uncertainty attached to that," Senior Vice-President Tom Byrne said on Tuesday.

"A big source of uncertainty is from the power supply situation and that has not stabilised. There could be further costs," he told Reuters in an interview in Hanoi.

He added the government has not been explicit on its likely assistance for Tokyo Electric Power , the operator of the crippled Fukushima Daiichi plant, and said the liability "could migrate to the government balance sheet and be reflected in budget deficits or government debts."

Moody's warned in February it might cut Japan's Aa2 rating -- its third highest -- if the government fell short of crafting a comprehensive tax reform as public debts reach twice the size of the ${esc.dollar}5 trillion economy.

Byrne, who overseas sovereign credits for Asia and the Middle East, also said that Moody's expects China to maintain a high rate of growth and avoid a hard landing of its economy.

"China's policy tightening supports our rating stance. But more transparency is needed on local government finances," he said. (Reporting by Rie Ishiguro; Editing by John Mair)

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