From BS, Moody’s has offered Joe Hockey leeway on Budget cuts:
Australia’s conservative government is walking a fine line in proposing deep budget cuts as resource-rich economy is slowing, Moody’s Investors Service said.
In an interview, Moody’s Senior Sovereign Ratings Analyst Steven Hess said there may be “economic consequences” if spending cuts sap demand. “Clearly there might be some effect on economic growth,” said Mr Hess, who is also lead United States sovereign credit analyst at the ratings agency.
Mr Hess said there was no imminent threat to Australia’s AAA sovereign rating and “even a do nothing budget would still imply modest budget deficits” compared with other developed nations.
…”The idea that they would return the budget to surplus is credit positive, but the timing isn’t critical,” Mr Hess said. “There is a lot of political rhetoric around the budget position, but fundamentally, Australia is in pretty good (fiscal) position.”
…”In the US, for example, we have seen that really substantial deficit reduction that has happened at the federal level has been a slight drag on economic growth,” he said.
All of the ratings agencies have previously insisted that Australia must aim for surplus “across the cycle” to retain its AAA rating. This is not inconsistent with that but it is a relaxation of the tone.
