Economists baffled over S&P warning

© iStockphoto.com/felixR

ECONOMISTS have expressed surprise at suggestions Australia's AAA-credit rating is under threat, pointing out the level of borrowings are significantly below other top rated countries.

The comments follow weekend reports that ratings agency Standard & Poor's has said Australia's sovereign AAA rating could be at risk if the government turned its back on plans to return the budget to surplus if the global environment deteriorates.

''We find these comments somewhat surprising,'' said ANZ senior economist Amber Rabinov.

Even after a string of budget deficits in recent years, Australia's net debt-to-GDP ratio this financial year is just under 10 per cent, she noted.

''A doubling of this ratio would still leave Australia significantly below the ratios of other AAA countries such as Germany, where debt-to-GDP is close to 50 per cent,'' Ms Rabinov said.

Read more at Brisbanetimes.com.au

The Australia Institute has released an infographic illustrating the difference between comments from Liberal Party frontbenchers and actual debt numbers.

Topics:  australia, debt, ratings agencies, s&p



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