S&P threatens Australia’s AAA credit rating

S&P Global Ratings upgraded Australia’s credit rating outlook to ‘stable’ in September 2018. S&P’s Anthony Walker says the federal government must retain its target of returning the Budget to surplus in 2019-20 in order to retain its triple-A credit rating. He has stressed the need for the government to have a strong public balance sheet so it can respond with fiscal stimulus if there is an external shock to the economy in the future. Martin Petch of Moody’s Investors Service says the Australian economy will be boosted by factors such as the government’s income tax cuts, official interest rate cuts and spending on infrastructure. From The AFR:

“The sovereign needs a strong fiscal position towards a surplus and addressing the net debt to maintain its AAA stable rating,” Mr Walker told The Australian Financial Review.

“The thing holding back the return to surplus at the moment is actually the states’ infrastructure spending.

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