Fitch: Australia debt change modest from wider deficit forecast

The US-based ratings agency, Fitch ratings, published a latest report on the Australian budget deficit forecasts, following Mondays’ MYEFO.

Key Quotes:

“Australia's public debt ratios are likely to peak later - and at a higher level - than previously expected by the government and Fitch Ratings as the economic outlook weakens.“

“However, the debt trajectory remains consistent with our 'AAA'/Stable sovereign rating on Australia, most recently affirmed in September.”

“Fitch still expects the government to reduce its deficit at a slower rate than official forecasts. “

“The MYEFO abandons the practice of assuming commodity prices will remain at recent averages; instead, it factors in a steady decline from current levels, though using price assumptions that are still higher than our own.“

“We also believe the government will find it hard to deliver on hitherto unlegislated spending cuts assumed in the MYEFO, worth a cumulative AUD13.2bn (0.8% of GDP) by FY20, given that the coalition government lacks a majority in the Senate.“