Australia Borrows $800m. Whatever

The issue on the Bloomie.

Today the Australian Office of Financial Management (AOFM) issued another $800 million in Australian Government Bonds as part of its $60 billion in issuance this year announced back in August.

The government borrowed the money at a rate of 2.91% which is more than 2% higher than a similar maturity in Germany, the United States and the UK but the good news is that we are borrowing at these rates because the Australian economy is relatively strong and the RBA still has the cash rate at 2.5% not the 0-0.5% that the other big central banks around the world have had to let their cash rates fall to.

There’s been some chatter about it today because it’s finance meeting politics. A big prong of the incoming Coalition government’s campaign has been the outgoing Labor Government’s borrowing program that funded the budget deficit.

This bit of political chicanery is fun to watch and is something we are all going to have to used to, it seems.

But the thing to remember is that if the Australian Government remains in good fiscal health and without the deficit our slowing growth rate would be slower.

Something the incoming Treasurer, Joe Hockey, might just want to remember.

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