Tokyo, June 12 (Bloomberg) -- Japan's debt, already the highest in the industrial world, will keep rising, a senior Moody's official said after being called to parliament to defend the decision to rate the world's second-biggest economy a riskier borrower than Botswana. ``We expect the debt to rise relative to gross domestic product and government revenue, no matter what scenario you lay out,'' Moody's senior analyst Tom Byrne told parliament, known as the Diet. The first parliamentary appearance in Japan by Moody's officials was an unusual twist in Japan's efforts to head off further ratings cuts that analysts say may threaten investment and slow a recovery. The campaign has failed to deter Moody's, Standard & Poor's and Fitch. Moody's latest downgrade -- a two-notch cut to ``A2'' -- came after Vice Finance Minister for International Affairs Haruhiko Kuroda sent letters demanding the three companies explain why their ratings are so low. Japan's frustration over losing its top-notch triple-A rating boiled over during today's hearing, with Finance Minister Masajuro Shiokawa saying he was ``very dissatisfied'' with the rating. ``The companies are looking very carefully at the state of the economy, but I don't see the link between that and the rating of government bonds,'' Shiokawa said. Moody's has said Prime Minister Junichiro Koizumi isn't doing enough to reduce the nation's debt, which the government estimates will swell to 693 trillion yen ($5.5 trillion), equal to 140 percent of gross domestic product, by March. ``To us, debt does matter,'' Byrne said today. He added that Japan's economy will underperform for the next one to two years. In one bright note for Japan, he said there's a less than 50 percent chance the rating will be reviewed again in the next two years.

Backfiring
The parliamentary hearing is an opportunity for politicians to score points with voters by attacking the ratings companies. As a strategy to avert further punishment to its rating, it will probably fail, one analyst said. If Japanese officials ``are looking to intimidate the agency, it's a strategy that is more likely to backfire,'' said Peter Petas, an analyst at CreditSights Inc., an independent credit research firm. Byrne also defended criticism that Japan shouldn't be rated lower than Botswana. Koizumi has questioned how the nation can have a lower rating than a country to which it provides aid.

Japan vs Botswana
Byrne said Japan has the largest peacetime debt since the end of World War II. In contrast, the central African country of about 2 million people ``has almost none, so the risk of default is low,'' he said. Botswana's debt is equal to about 8 percent of gross domestic product, and its budget and current account surpluses make it ``especially stable for a country in its stage of development,'' Byrne said. Standard & Poor's has said there's a 50 percent chance it will lower Japan's local-currency rating again after cutting it three times in 14 months, most recently April 15 by one notch to ``AA-.'' The government has said it deserves higher ratings because the country has the world's largest savings surplus and the biggest pool of foreign currency reserves. David Beers, head of sovereign ratings for Standard & Poor's, met Japanese officials last week to explain why it downgraded Japan. Rebecca Hill, a spokeswoman for the company in New York, said she was unaware of any plans for the company to address the parliament. Jim Jockle, a spokesman for Fitch Ratings, declined to comment.