Moody’s: Bushfires to hit government budgets

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Moody’s says in a new report that Australia’s (Aaa stable) general and state governments can absorb the near-term credit impact from the ongoing bushfires, although they are “likely to result in rising and recurring costs that will test the government’s capacity to mitigate these costs”:

The near-term credit implications for the sovereign and the states are limited given a likely contained economic impact and the availability of ample fiscal buffers.

Over time, increasingly frequent and severe natural disasters related to climate change are likely to result in rising and recurring costs for Australia’s general and local governments, which will test their capacity – currently strong – to mitigate these costs…

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.