Tokyo Metropolitan Government

This report does not constitute a rating action. Overview Credit context and assumptions Base-case expectations Strong tax revenue base as the economic center of Japan Increasing tax revenue supported by moderate domestic economic growth Fiscal discipline evident in strong record of revenue and expenditure management Continued moderate decrease in debt, led by positive fiscal balance Sovereign rating constrains Japan's local and regional governments (LRGs) Exceptional liquidity as reserves accumulate and debt declines TMG is under pressure to increase its budget to address priorities such as child rearing and elder care support, urban infrastructure upgrades, and decarbonization. In addition, the impact of policy uncertainties in the U.S. and heightening geopolitical risks on the TMG's economy and tax revenues remains uncertain. Nevertheless,

...S&P Global Ratings believes Tokyo Metropolitan Government's (TMG) fiscal balance will remain positive for the next two years, led by increasing tax revenue. TMG is under pressure to increase its budget to address priorities such as child rearing and elder care support, urban infrastructure upgrades, and decarbonization. In addition, the impact of policy uncertainties in the U.S. and heightening geopolitical risks on the TMG's economy and tax revenues remains uncertain. Nevertheless, we anticipate TMG's fiscal surplus after capital accounts will remain slightly positive on average, supported by disciplined control over expenditure and utilizing reserves. We base this on our assumption that the domestic economy will continue to grow steadily for the next two years....

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