Moody’s Investors Service warned Wednesday that Japan’s credit rating might be in for a downgrade if that nation cannot successfully implement fiscal reforms.

According to Reuters, Tom Byrne, senior vice president and regional credit officer at Moody's, said that economic growth would not be enough to balance its budget, and that reform would also be needed. Although he said that there was "a long fuse before Japan's fiscal problems blow up into a crisis," he added that Tokyo would have to take steps to cut the nation’s debt. Political developments that blocked parliamentary action, he said, "would not be a credit-positive development."

The Japanese government was to present changes in its pension and healthcare systems, he explained, and said that the changes were to be presented by the end of April, followed with a fiscal reform roadmap to be unveiled by June. Byrne added that Moody's was waiting for these actions; delays could cause the company to take further steps, he said, such as a downgrade, change in outlook to negative, or a step toward a negative outlook.

While he said that Moody’s was willing to wait for the legislature to act, Standard & Poor’s has not been so patient; in January it cut Japan’s rating one notch to AA-, and did not give much credence to the idea that planned changes would help or that a split parliament would be able to take action.

Markets have not reacted strongly to the news, since Japanstill has several factors in its favor. Local investors hold most of its debt, and its international payments are strong. It also has a deep domestic market and a high savings rate among its citizens.