S&P Global Ratings has today announced the reduction of Victoria’s credit rating level from AAA to AA.
The Victorian Chamber voiced our concerns over a level of spending and borrowing that would jeopardise our state’s credit rating when the State Budget was handed down two weeks ago.
At the time, we said: “Net debt will reach $87 billion this year and will grow to $155 billion by June 2024. This debt must be managed carefully to ensure expenditure growth does not exceed revenue growth. The Chamber has consistently supported spending but not where it compromises the state’s AAA credit rating.”
We support increased debt levels necessary to invest in locally-delivered infrastructure in light of the once in a century circumstances. However, the downgrade comes at a cost to Victorians with a possible increase in interest payments of around $10 million per annum. The government must ensure projects are well managed and prevent cost blowouts.
To be attributed to Victorian Chamber of Commerce and Industry Chief Executive Paul Guerra:
“News that Victoria’s credit rating has dropped to AA from AAA will concern Victorian businesses who are just starting get their confidence back.
“While we support increased spending, it is now up to the State Government to act quickly and deliver a plan to ensure that we recover that prized AAA status.
“COVID-19 restrictions and lockdowns have certainly knocked our economy for six, but we are in a better position than many other jurisdictions around the globe and we can reclaim our AAA status through sound policy, strong leadership and management, collaboration, innovation and hard work.
“Now that we have smashed the virus and smashed the restrictions, we must put all our energy and focus into our economic recovery.”