Australia’s budget balance looks set to return to surplus one year earlier than expected. However, that’s not been enough for ratings agency Standard and Poor’s (S&P) to remove its negative outlook on Australia’s AAA credit rating.
“The budgetary position has improved over the past year, aided by strength in the Australian and global economies. The government has also shown a commitment to fiscal prudence with its plan to return a balanced budget earlier than previously announced,” S&P Global Ratings said in a statement following the budget’s release.
“These developments have helped ease the negative pressures on the Australian sovereign ratings.
“Nevertheless, risks to the country’s fiscal outlook remain, including increasing external economic uncertainties in recent months. Global trade tensions, coupled with rising investor aversion to emerging markets in recent months, may dampen economic growth among Australia’s key trading partners.
“As such, risks to the government’s plan for an earlier return to budget surpluses are significant. The outlook on the long-term Australian sovereign ratings remains negative for now to reflect these uncertainties.”
S&P placed Australia’s AAA credit rating on negative outlook in July 2016, implying a one-in-three risk that it could be lowered within the next two years.
Australia is only one of 11 sovereign governments with a top credit rating with S&P.
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