An International Monetary Fund report warns of fiscal damage by high spending states and territories.
The Finocchiaro CLP Government will continue tackling Labor's massive debt as it rebuilds the economy and funds frontline services.
The upcoming May 2026 Budget will remain sensible and measured to restore the Territory's finances.
Treasurer Bill Yan has highlighted a blunt warning from the International Monetary Fund (IMF) as evidence of the fiscal damage left by the former Labor government, vowing the May 2026 Budget will remain sensible and measured to restore the Territory's finances.
In its latest Article IV Consultation here, the fund flags state and territory debt across Australia has surged, fiscal targets have been missed, and credit rating pressure is rising with smaller jurisdictions including the NT experiencing particularly rapid debt growth relative to their economies.
Treasurer Bill Yan said Labor left the Territory exposed after eight years of irresponsible spending.
"When the Finocchiaro CLP Government came to office in 2024, the Territory was on track to smash through a $15 billion debt ceiling," he said.
"We inherited a $1.4 billion hole in the forward estimates, debt was skyrocketing, confidence was collapsing and the budget position was deteriorating - so we took decisive action."
"The minute we got into government we started work straight away to rebuild the economy, reduce spending and debt levels and reverse the trajectory Labor had us on,"
"The Finocchiaro CLP Government has since stabilised the books by controlling expenditure and reducing business taxes, and the next budget we're releasing for 26/27 isn't going to be extravagant," the Treasurer said.
"We're living within our fiscal means and we're sticking with it, and with a small population I won't be taxing Territorians into oblivion either," he said.
"That's why this upcoming budget will stay the course, cutting costs and growing the economy whilst properly funding frontline services - just like we did from the first day in office."
Constraining debt growth is already showing results, reducing the 2025/26 projected debt level by $479 million and helping maintain the Territory's Aa3 Stable credit rating from Moody's.
"This speaks volumes to global markets and investors that we are serious about managing our economy responsibly, and creating an environment open to investment," he said.
"We didn't get a downgrade, which was our biggest worry. That stability was not inherited - it was earned."
He said the Government is preparing the economy to capitalise on the Territory's natural strengths to support the growing energy, mining, and defence sectors.
"We are focused on making the Territory the most competitive place to live, work, visit and invest - supported by stable policy settings, competitive payroll tax arrangements and practical cost-of-living relief," he said.
Treasurer Yan said changes to the payroll tax threshold was an example of smart policy helping to drive economic and revenue growth.
"When we raised the tax-free threshold and exempted apprentices and trainees, we saw businesses investing in their workforce, improving their wages, and new businesses kicking off, which has improved our payroll tax revenue," he said.
In December 2025, payroll tax collections for 2025-26 totalled $170 million, exceeding the year-to-date forecast by 14% led by the mining, real estate, transport and health care sectors.
"The data clearly shows growth across the Territory with more businesses hiring, and both activity and revenue increasing - because our economy is strengthening."
Mr Yan said the Government's approach is reinforced by the Darwin Major Business Group 2025 Over The Horizon herereport.
"Their report backs exactly what we are doing to grow our way out of debt," Mr Yan said.
"Industry knows that further government debt is not the solution - accelerating private sector investment is."
"That's why we are delivering a safer Territory, a stronger economy and the lifestyle Territorians deserve, through a year of growth, certainty and security."
