Tokyo Metropolitan Government

This report does not constitute a rating action. Overview Credit context and assumptions Base-case expectations --Strong revenue base as the economic center of Japan --Recovery of tax revenue from a bottom in fiscal 2020 along with moderate economic growth --Fiscal discipline evident in strong record of revenue and expenditure management --Progress reducing debt thanks to fiscal balance turning to positive --Sovereign rating constrains Japan?s local and regional governments (LRGs) --Exceptional liquidity as debt payment fund and fiscal adjustment reserve accumulate The pandemic hit TMG?s tax revenue. But a strong revenue base centered on large corporations supports it. We expect tax revenues to recover from a bottom in fiscal 2020 as the economy grows moderately. We also anticipate TMG will secure

...S&P Global Ratings believes Tokyo Metropolitan Government's (TMG) fiscal balance will remain positive from fiscal 2021 (ending March 31, 2022) after sustaining damage from COVID-19. The pandemic hit TMG's tax revenue. But a strong revenue base centered on large corporations supports it. We expect tax revenues to recover from a bottom in fiscal 2020 as the economy grows moderately. We also anticipate TMG will secure a fiscal surplus over the next two years thanks to its capacity for strong and stable financial management, despite continuing pressure on expenditure related to the pandemic. We forecast TMG's debt outstanding will return to its pre-pandemic level as its fiscal balance recovers. We think TMG will continue a certain amount of capital expenditure to strengthen sustainable urban infrastructure and continue bond issuance to manage its liquidity. However, continuous recovery of its fiscal balance as corporate-related tax revenue rebounds will help reduce its debt over the next two...

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