IMF sees record tax revenues for Australia, but ongoing deficits
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The news: Australia’s tax revenue will hit a record 36.4% of GDP in 2024, according to the IMF's Fiscal Monitor, but the tax windfall won’t be enough to prevent six years of forecast budget deficits.
The context: High iron ore and coal prices, rising house prices and increased workforce participation have boosted government’s coffers.
That has helped drive back-to-back budget surpluses. But the lucky country is also facing continued spending pressures from health, aged care the NDIS and an ageing population, leading to expected deficits.
The numbers: With a deficit of 1.7%, Treasurer Jim Chalmers, who is in Washington for meetings with finance ministers and central bankers on the sidelines of the IMF and World Bank conference, said the figures showed Australia had the third-strongest budget balance out of G20 countries, up from 14th in 2021.
The IMF tables also show Australia’s deficit will surge to -2% of GDP in 2025, before falling slightly to -1.3% in 2026, -0.9% in 2027, and -1% the following two years.
The IMF this week ranked Australia among the 10 advanced economies with the highest inflation rates this year, behind Iceland, Belgium, Slovakia, Estonia and Andorra.
Next year, Australia’s inflation rate at 3.3% is expected to be the second-highest among advanced economies, only behind Slovakia at 5.1%, the IMF data showed.
The figures also showed, Australia's debt remains low by global standards at 49.3% of GDP, and well below the advanced economy average of 109.4% of GDP.
What they said: “Under the Albanese Government, Australia is ranked ahead of all G7 economies on budget management in 2024, including the US, UK, Canada, France and Germany,” Chalmers said.
“Australia also has the fifth lowest gross debt to GDP ratio in the G20 in 2024, a position which improved in 2023, and has been maintained since then.”
“The government’s budget strategy strikes the right balance between fighting inflation, rolling out responsible cost-of-living relief, supporting growth in our economy and strengthening public finances.”
The source: IFM fiscal monitor
