Australia's AAA credit rating is now under even more pressure, says S&P

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Australia has retained its AAA credit rating, at least in the near-term, with ratings agency Standard and Poor’s maintaining the nation’s long-term rating at AAA following the release of the government’s mid-year economic and fiscal outlook (MYEFO) earlier today.

The group said that it had no immediate effect on the credit rating or outlook for Australia, although it maintained a negative ratings watch, which still implies a one-in-three chance that it could be downgraded within the next two years.

It looks like that may occur if the commentary from the group is anything to go by.

“The government’s worsening forecast fiscal position, as outlined in its latest budget projections earlier today, further pressures the rating”, S&P said, adding that it remains “pessimistic about the government’s ability to close existing budget deficits and return a balanced budget by the year ending June 30, 2021”.

The group said that over the coming months it will continue to monitor the government’s willingness and ability to enact new budget savings or revenue measures to reduce fiscal deficits materially over the next few years.

Earlier in the session, both Fitch and Moody’s affirmed Australia’s sovereign rating at AAA with a stable outlook.

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