S&P reaffirms Australia's AAA credit rating
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The news: S&P has reaffirmed Australia’s AAA credit rating as the country’s debt is lower compared to most advanced economies and growth is forecast to pick up.
The numbers: Earlier this week, Treasurer Jim Chalmers and Finance Minister Katy Gallagher announced that the country’s 2024-25 budget deficit was at $10 billion, an improvement on the $27.9 billion originally forecast.
Chalmers said Labor’s three final budget outcomes had delivered a cumulative underlying cash balance of $28 billion. This, he said, was $209 billion better than the $181 billion deficit it "inherited” from the Liberal government in 2022.
“The better fiscal position means gross debt in 2024–25 was $188 billion lower than the one left to us, avoiding over $60 billion in interest costs over the 11 years to 2032–33,” Chalmers said.
The context: Earlier this year, S&P said Australia’s credit rating was at risk if spending related to Federal Election promises resulted in larger structural deficits, and debt and interest expenses rose more than expected.
What they said: S&P said: “Australia’s fiscal performance is sound… Australia’s economic outlook is sound”.
“Sound fiscal metrics support our 'AAA' long-term sovereign credit rating on Australia.”
Chalmers said: “While we’ve delivered a substantial budget improvement, we recognise that structural pressures are intensifying rather than easing and that’s why we’re taking decisive action to address some of the biggest spending pressures on the budget”.
“We’re delivering substantial reforms to the National Disability Insurance Scheme and aged care system, and we’re paying down Liberal debt which is saving us tens of billions of dollars in interest payments," he said.
The source: Treasury media release
