In the 2018 Budget announced today, Australian Treasurer Scott Morrison plotted the path to return to balance in fiscal 2019/20, and turn into AUD 22b surplus in fiscal 2020/21. The move is welcomed by S&P Global Ratings. But the negative outlook on Australia’s AAA sovereign ratings is maintained.
S&P said in a statement after the budge release that “the budgetary position has improved over the past year, aided by strength in the Australian and global economies. ” Also, “the government has also shown a commitment to fiscal prudence with its plan to return a balanced budget earlier than previously announce.” Such developments helped “ease the negative pressures on the Australian sovereign ratings.”
However, “risks to the country’s fiscal outlook remain, including increasing external economic uncertainties in recent months. Global trade tensions, coupled with rising investor aversion to emerging markets in recent months, may dampen economic growth among Australia’s key trading partners.”
And, “risks to the government’s plan for an earlier return to budget surpluses are significant. The outlook on the long-term Australian sovereign ratings remains negative for now to reflect these uncertainties.”
