Standard and Poor’s (S&P) has given Australia an AAA credit rating, solidifying it as one of only nine countries to be rated AAA by all three major credit rating agencies – S&P, Fitch, and Moody’s.
In a statement, S&P clarified that “strong fiscal outcomes” are a key factor when assigning an AAA rating as they reduce a government’s annual borrowing needs and provide a buffer to future economic shocks.
According to Treasurer Jim Chalmers, this latest rating adds to a “growing” group of voices that are endorsing the Albanese government’s budget strategy.
“Our responsible budget management means less debt, lower deficits and billions in interest costs saved,” the Treasurer said on Wednesday.
“The report makes it clear that despite the challenges confronting us, our government is doing better than other countries’ when it comes to budget repair to help insulate ourselves against global uncertainty.”
Namely, the S&P report identified Australia’s “ability and willingness” to implement reforms that ensure sustainable finance and economic growth.
The Labour government has returned 88 per cent of revenue upgrades across its last two budgets and mid-year economic and fiscal outlook, according to Mr Chalmers.
The former government, comparatively, returned 40 per cent.
The Treasurer added that the Albanese government has found almost $50 billion in savings and reprioritisations since coming to government, and by returning the majority of revenue upgrades to the budget, the government is projected to save about $145 billion in interest costs over the medium term.
“We are realistic about the challenges facing our economy, including high but moderating inflation, higher interest rates and global uncertainty, all of which are impacting growth, but our AAA rating is further proof Australia is coming at these challenges from a position of genuine economic strength.”
“Wages are growing at their fastest pace in nearly 15 years, with two consecutive quarters of real wage growth, we’ve overseen the creation of 650,000 jobs and because of our efforts, the budget is in much better nick.”
“The report by S&P is another reminder that the Albanese government’s responsible economic management is improving the strength and sustainability of our national finances and laying the foundations for a better future,” he concluded.
The announcement comes after a series of recent endorsements have also been made by the IMF, Organisation for Economic Co-operation and Development, and the RBA.
In November, Fitch reaffirmed Australia’s AAA credit rating and described the country’s outlook as “stable”.
