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 supported by moderate domestic economic growth Fiscal discipline evident in strong record of revenue and expenditure management Progress in continuing to reduce debt, led by slightly positive fiscal balance Sovereign rating constrains Japan's local and regional governments (LRGs) Exceptional liquidity as reserves accumulate and debt declines We expect high levels of tax revenue to continue amid moderate economic growth. At the same time, we anticipate TMG's fiscal surplus after capital accounts will narrow as expenditure rises to pay for sustainability measures related to matters such as a falling birthrate and strengthening

...S&P Global Ratings believes Tokyo Metropolitan Government's (TMG) fiscal balance will remain positive for the next two years despite increased expenditure on priorities. We expect high levels of tax revenue to continue amid moderate economic growth. At the same time, we anticipate TMG's fiscal surplus after capital accounts will narrow as expenditure rises to pay for sustainability measures related to matters such as a falling birthrate and strengthening urban infrastructure. We forecast TMG's debt will continue to decline moderately, reflecting controlled debt management. We think TMG will continue an expansionary fiscal policy supported by a high level of tax revenue. Meanwhile, its capacity for strong and stable financial management, such as active use of reserves and initiatives to secure financial resources, will continue to contain debt issuance. We expect TMG's interest burden from rising interest rates will be limited over the next two years, considering progress in debt reduction,...

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