Aus­tralian states credit qual­ity low

The Pak Banker - - 6BUSINESS -

Global rat­ing agency Moody’s says that the credit qual­ity of the six Aus­tralian states and one ter­ri­tory rated by Moody’s re­mains un­der pres­sure with large bud­get deficits an­tic­i­pated for the year end­ing June 30, 2013.

At the same time, al­most all of the ju­ris­dic­tions have plans to nar­row their bud­get gaps and forecast sig­nif­i­cant im­prove­ments in their fi­nan­cial per­for­mances over the medium term be­cause they have the fi­nan­cial flex­i­bil­ity to ad­just ex­pen­di­ture, if re­quired. The Moody’s report fur­ther says that while th­ese ju­ris­dic­tions may not meet their bud­get tar­gets for FY2012-2013, to the ex­tent that their re­solve re­mains solid and they im­ple­ment off­set­ting mea­sures that al­low a re­turn to bal­ance, then rat­ings qual­ity will likely be main­tained. Con­versely, if fis­cal pol­icy re­sponses to counter on­go­ing bud­get deficits are in­suf­fi­cient and if the ju­ris­dic­tions are un­able to re­verse the de­te­ri­o­ra­tion in their fi­nan­cial per­for­mance, then Moody’s would likely con­sider ad­just­ing their rat­ings. How­ever, while some rat­ing ad­just­ments may oc­cur, Moody’s does not an­tic­i­pate multinotch ad­just­ments as the cur­rent Aa-Aaa range re­flects a fa­vor­able op­er­at­ing en­vi­ron­ment, in­clud­ing solid eco­nomic growth, sig­nif­i­cant bud­get flex­i­bil­ity and strong fi­nan­cial sup­port from the Com­mon­wealth (Aaa sta­ble).

In re­sponse to re­cent years’ de­te­ri­o­ra­tion, all states have im­ple­mented ex­pen­di­ture con­trol mea­sures to bring spend­ing in line with rev­enues, lead­ing to ex­pec­ta­tions.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.