Moody's: Japan's July 20 Election Results May Impact Fiscal Health and Credit Rating

According to a report by Jinse Finance, Moody's stated that Japan's upcoming House of Councillors election could have a significant impact on the country's fiscal health and credit rating if it results in large-scale tax cuts. The July 20 election is crucial for Prime Minister Shigeru Ishiba's government to remain in power, especially after his ruling Liberal Democratic Party (LDP) and coalition partner Komeito lost their majority in the House of Representatives during the snap election in October. The LDP-Komeito coalition plans to include cash handouts in their campaign pledges to help households cope with inflation, but they are resisting opposition parties' calls for tax cuts. Christian de Guzman, Manager of Moody's Sovereign and Sub-Sovereign Risk Group, noted that if election pressures lead to increased tax cuts, it could negatively affect the country's rating, depending on the scale and duration of the tax reductions.