* Policy steps may help lower budget gap sooner than Fitch
* Fitch says fiscal f'casts underpinned by steady economic
* Moody not so sure budget will return to surplus by 2020/21
(Recasts, rewrites throughout to include comment from Fitch)
By Swati Pandey and Cecile Lefort
SYDNEY, May 12 Two top ratings agencies affirmed
Australia's prized triple-A credit rating on Friday, despite
concerns about persistently high budget deficits that have
eroded the country's fiscal strength compared with its
Australia's conservative government pledged on Tuesday to
return to surplus in four years to end more than a decade of
deficits that have threatened its top-notch ratings.
Although the government has projected a higher deficit for
2017/18 at A$29.4 billion ($21.7 billion), Fitch expects policy
measures announced by the government, if implemented, to help
lower the shortfall earlier than it had expected.
"Fitch's fiscal forecasts are underpinned by steady economic
growth," it said in a statement.
"The broad-based improvement in global demand so far this
year, if maintained, would also support exports. The mining
investment downturn continues to spill over to weaker private
business investment in mining states, but we expect this to
recede over the next two years."
The budget forecast Australia's A$1.7 trillion economy to
grow at 2.75 percent in 2017/18 and strengthen to 3 percent
through to 2020/21 - much faster than other advanced economies.
However, Moody's which also reaffirmed its AAA rating of
Australia was not so sure about the budget returning to surplus
"Moody's expects that revenues will not rise as fast as the
government projects, and that expenditure spending will remain
higher than budgeted," it said in a statement.
"The government projects a rise in revenues as a share of
GDP; a trend that has not materialised in the last three years,"
the ratings agency said, adding it was expecting steady revenues
Australia is among 10 countries still rated triple-A by all
three major agencies, but slower economic growth in recent years
and stubborn fiscal deficits have jeopardised its top ranking.
Moody's and Fitch said the 2017/18 budget had no major
impact on the country's triple-A ratings with stable outlook,
while S&P Global Ratings has yet to comment.
S&P put the Australian sovereign on negative watch last
July, citing weakened prospects for improvement in budgetary
($1 = 1.3523 Australian dollars)
(Reporting by Cecile Lefort and Swati Pandey; Editing by