Queensland in Australia may lose its AA+ credit rating
The Australian state of Queensland may soon face a downgrade of its AA+ credit rating, which will increase pressure on the state's multibillion-dollar debt and debt-servicing costs. According to ABC News Australia, the rating downgrade is inevitable.
AMP chief economist Shane Oliver said that a downgrade would increase the cost of servicing Queensland's debt. According to him, this could mean less funding for public services, pressure to raise taxes, or a growing budget deficit.
Dispute between governments
Australian Federal Treasurer Jim Chalmers called the risk of a downgrade “deeply concerning.” He said that the Queensland government's financial position had deteriorated sharply despite substantial federal government support for the state.
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Queensland Treasurer David Janetzki declined to comment on possible rating changes. At the same time, he blamed the potential downgrade on the previous state Labor government, as well as decisions in the latest federal budget. Janetzki said that shifting costs from the federal level to the states had significantly affected their budgets.
Debt and interest costs
Shane Oliver noted that there were grounds for criticism of both the Queensland government and federal authorities. Among the factors, he cited reduced stamp duty revenue due to falling property prices and lower home sales, rising bond yields, the distribution of goods and services tax revenue, and insufficient fiscal restraint at the state level.
Queensland's total debt is forecast to exceed $216 billion by the 2029–2030 financial year, an increase of 52% over the next four years. Interest costs are expected to reach $6.83 billion in the current financial year and could rise to nearly $11 billion by 2029–2030. Rating agency S&P did not comment on a possible decision or announcement.
