Australia’s AAA credit rating has been reaffirmed by Standard & Poor’s (S&P) in an expression of confidence in the Morrison Government’s handling of the coronavirus pandemic and our record of prudent economic and fiscal management.
In its report, S&P notes that Australia’s “strong fiscal performance remains a credit strength” and that “while fiscal stimulus measures will soften the blow presented by the COVID-19 outbreak and weigh heavily on public finances in the immediate future, they won’t structurally weaken Australia’s fiscal position. This expected improvement is a key supporting factor of our ‘AAA’ rating.”
Today’s report confirms Australia as one of only 10 countries which has a AAA credit rating with all three major ratings agencies.
However S&P also recognised that “the COVID-19 outbreak has dealt Australia a severe economic and fiscal shock” and has put our AAA rating on a negative outlook which is defined as a one third probability of a downgrade over the next two years.
The Morrison Government has taken decisive action to protect Australians and the economy from the effects of the coronavirus, with Government support for the economy totalling $320 billion or 16.4 per cent of GDP.
This unprecedented level of support reflects the unprecedented moment that we find ourselves in.
S&P’s action today, in reaffirming our AAA rating, is a reminder of the importance of maintaining our commitment to medium term fiscal sustainability.
Our disciplined economic and budget management, which saw the Federal Budget return to balance for the first time in 11 years, meant the Budget as noted by S&P “was on track to achieve a surplus in fiscal 2021 before the COVID-19 outbreak”.
Our measures are temporary, targeted and proportionate to the challenge we face and will ensure Australia bounces back stronger on the other side, without undermining the structural integrity of the Budget which Australians have worked so hard to restore.