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Friday, January 28, 2011

Population ageing and sovereign debt ranking now being linked

Ratings firm Standard & Poor's has downgraded Japan's sovereign debt rating by one notch to AA- from AA, saying that it expects the country's fiscal deficits to remain high and noting there is a lack of a "coherent strategy" by the government to tackle the issues. Beware US and most of Europe!

Among the other leading firms, Fitch Ratings said that it was maintaining its stable outlook on the basis that the current low interest rates would allow it to fund itself, although it noted that the longer-term pressures from an aging population could threaten funding stability.

This is the first time I have seen commentary about sovereign debt being linked with the aging population. I think we might hear more of this in the future. Dick Stroud

1 comment:

Philippa Aldrich said...

And of course The World Economic Forum’s report, Global Risks 2011, is warning of huge unfunded liabilities created by ageing populations saying "The problem is so great some of the world’s most advanced economies – including the UK – would be insolvent if they accounted properly for the pension and health promises they have made to their ageing populations"!