INTERVIEW: Int'l Discussion Needed on Rating Agencies: Japan's Watanabe

Tokyo, Aug. 16 (Jiji Press)--International discussions are necessary on the role of credit rating agencies, former top Japanese financial diplomat Hiroshi Watanabe said in a recent interview with Jiji Press.
Watanabe, former vice finance minister for international affairs, said what credit rating agencies should do and what markets should expect on them need to be clarified.
Japan should take the lead in such discussions, he said.
Watanabe said private companies and countries should not be rated using the same method. Decisions by corporate managers are affected by external factors, while countries are committed to paying debt under any circumstances, he said.
In addition, any rating should pay due to heed to regional characteristics, he said.
His comments came after the first-ever downgrade of the U.S. sovereign rating by Standard and Poor's on Aug. 5 triggered financial market turmoil, including global stock price plunges.
Referring to recent confusion over efforts to raise the U.S. debt ceiling, Watanabe said financial markets are worried that Democrats and Republicans will not be able to hold constructive discussions ahead of the presidential election next year.
He also said Japan is losing market trust in its ability to implement economic and fiscal policies in a timely manner.
Watanabe, now president and chief executive at the Japan Bank for International Cooperation, said that although global economic growth is expected to be slower than projected, people should not be too pessimistic.
Excessive fiscal expenditure and monetary easing steps may dampen the cyclical economic recovery, he said.