TOKYO (AP) - Standard & Poor's cut Japan's credit rating one notch Thursday to AA- on concern that the government's debt will rise more than it had expected.
S&P projected that Japan's fiscal deficit will remain high for the next few years, reducing the government's fiscal flexibility.
Tokyo will have difficulty managing its debt amid persistent deflation and a rapidly aging population, it said in a release.
S&P said Prime Minister Naoto Kan's ruling Democratic Party lacks a coherent strategy to tackle the country's debt problems, and doubted that the government's planned reviews of the country's social security and sales tax this year will lead to an improvement in the country's balance sheet.
Japan's annual fiscal deficit will fall only modestly from an estimated 9.1 percent of GDP in fiscal 2010 to 8 percent in fiscal 2013, the rating company predicted.
Japan's cumulative national debt is nearly twice its GDP.