SYDNEY, May 12 (Reuters) - Australia’s strong fiscal position underpins its triple-A rating and stable outlook, although the government may have underestimated future deficits in its budget projections, credit rating agency Moody’s said on Friday.
Australia’s conservative government pledged on Tuesday to return to surplus in four years to end more than a decade of deficits that have threatened its top-notch ratings.
But Moody’s is not so sure about the time frame.
“Moody’s expects that revenues will not rise as fast as the government projects, and that expenditure spending will remain higher than budgeted,” it said in a statement.
“The government projects a rise in revenues as a share of GDP; a trend that has not materialized in the last three years,” the ratings agency said, adding it was expecting steady revenues instead.
Australia is among 10 countries still rated triple-A by all three major agencies, but slower economic growth in recent years and stubborn fiscal deficits have jeopardised its top ranking.
Moody’s and Fitch ratings said the 2017/18 budget had no major impact on the country’s triple-A ratings with stable outlook, while S&P Global Ratings has yet to comment.
S&P put the Australian sovereign on negative watch last July, citing weakened prospects for improvement in budgetary performance. (Reporting by Cecile Lefort; Editing by Eric Meijer)