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 High level of tax revenue despite decelerating economic growth Fiscal discipline evident in strong record of revenue and expenditure management Progress reducing debt thanks to positive fiscal balance Sovereign rating constrains Japan's local and regional governments (LRGs) Exceptional liquidity as reserves accumulate We expect high levels of tax revenue to continue amid moderate, albeit slowing, economic growth, thanks to a strong revenue base centered on large corporations. While we anticipate TMG's balance after capital accounts will remain positive over the next two years, the surplus will shrink slightly compared with our previous expectation because of increasing

...S&P Global Ratings believes Tokyo Metropolitan Government's (TMG) fiscal balance will remain positive for the next two years despite an uncertain economic environment. We expect high levels of tax revenue to continue amid moderate, albeit slowing, economic growth, thanks to a strong revenue base centered on large corporations. While we anticipate TMG's balance after capital accounts will remain positive over the next two years, the surplus will shrink slightly compared with our previous expectation because of increasing expenditure arising from soaring prices, in addition to pandemic countermeasures. We forecast reduction in TMG's debt will progress reflecting its recovering fiscal balance and contained debt management. We think TMG will continue a certain amount of capital expenditure for decarbonization and strengthening urban infrastructure. However, we expect its high tax revenues and capacity for strong and stable financial management will continue to help reduce debt over the next...

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