Australia’s Major States Grapple with Budget Strains Due to Income Squeeze

Australia’s Major States Grapple with Budget Strains Due to Income Squeeze

Australia’s two biggest states will struggle to return their budgets to surplus as the economy sags under central bank rate hikes that also sent government borrowing costs soaring, according to ratings agency Moody’s Investors Service.

“New South Wales and Victoria, which were most heavily impacted by COVID-19, continue to suffer from the lingering fiscal impact as they both look to manage the delivery of their respective election spending commitments, sticky cost pressures and higher residual debt burdens,” John Manning, senior credit officer at Moody’s, wrote in a report this week. Western Australia and Queensland enjoy windfall revenue gains underpinned by strong high commodity prices.

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