From the AFR:
Moody’s Investors Service senior vice president Steven Hess said the budget update revealed “somewhat worse projections” than expected for both fiscal and debt positions.
“The lowering of the GDP growth forecast next year and the resultant substantially larger fiscal deficits are clearly credit negative for the government’s debt position,” he said in a statement.
However, he said the federal government has very low overall debt levels and the larger deficit in the current fiscal year, while leading to a rise in debt, was “not likely” to change Moody’s thinking about the AAA rating.
“Moody’s will await policy initiatives in the next budget and re-evaluate the medium-term fiscal outlook. The MYEFO by itself does not change Moody’s stable rating outlook for Australia,” the statement says.
Similarly, Standard & Poor’s Craig Michaels said the agency will look to the May 2014 budget for the government’s articulation of its medium-term fiscal targets and the policy measures it will implement to achieve those targets.
“Annual budgets are typically where governments reset policies in line with their fiscal objectives. We note the government’s indication today that it will incorporate measures in the next budget to improve the fiscal outlook, with policy measures informed in part by the recommendations of the government’s commission of audit,” Mr Michaels says in a statement.
