Federal Budget: Gross debt to peak lower than expected
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The news: The upcoming Budget will show gross debt at $904 billion last financial year. The gross debt-to-GDP ratio is now expected to peak lower than previously forecast.
The numbers: Gross debt-to-GDP will peak at 35.2% in 2026-27 on the latest government projections before declining in 2027-28 to 34.9%. That's down from a previous estimate of debt-to-GDP reaching 35.4% in 2027-28.
For 2023-24, this is expected to be 33.7% — 0.2 percentage points lower than the mid-year update.
The context: The government is paying down $152 billion in debt to reduce the interest bill, saving about $80 billion over the 10 years to 2032-33.
The government is trickling out data in the lead up to the budget relating to the economic management of the nation's finances, such as flagging smaller revenue upgrades than previous years, and is facing criticism that it may be preparing to hand down an "expansionary" spending Budget at a time when inflation is still running above target. Treasurer Jim Chalmers is currently "aiming" for another surplus.
What they said: "Debt will peak significantly lower than was projected at the time of the election thanks to our responsible economic management," Chalmers said.
The source: Treasury estimates
