Australia likely to reduce deficit at slower rate than official forecasts - Fitch

US-based ratings agency, Fitch ratings, in a latest report on the Australian budget deficit forecasts, following Mondays’ MYEFO said that Australia's debt trajectory remains consistent with 'AAA'/Stable sovereign rating, most recently affirmed in September.

According to its Mid-Year Economic and Fiscal Outlook (MYEFO), released on Monday, Australia's government increased its budget deficit forecasts for the underlying cash balance by a cumulative AUD10.3bn (0.6 percent of GDP) for the next four years, largely owing to lower expectations for real GDP growth and wage inflation. It also projected gross and net debt ratios would peak in FY19 (12 months to end-June), a year later than forecasted six months ago in the 2017 budget.

Fitch said it still expects the government to reduce its deficit at a slower rate than official forecasts. The agency added that Australia's public debt ratios are likely to peak later - and at a higher level - than previously expected by the government and Fitch Ratings as the economic outlook weakens.

“We also believe the government will find it hard to deliver on hitherto unlegislated spending cuts assumed in the MYEFO, worth a cumulative AUD13.2bn (0.8% of GDP) by FY20, given that the coalition government lacks a majority in the Senate.“ says Fitch.

FxWirePro's Hourly AUD Spot Index was at -157.554 (Highly bearish), while Hourly USD Spot Index was at 108.341 (Highly bullish) at 1055 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.