July 23, 2020 / 2:42 AM / 23 days ago

S&P says Australia's 'AAA' rating can absorb growing deficit

SYDNEY (Reuters) - S&P Global Ratings on Thursday said Australia’s triple A credit rating can withstand the large widening in the government’s budget deficit projected by Treasurer Josh Frydenberg as it deals with the impact of the coronavirus.

The agency said the rating reflects its expectation that the economy will begin to recover from recession during fiscal 2021 and that the government’s fiscal balance would improve during the next few years.

S&P in April revised its outlook on Australia to negative from stable, reflecting the expansion in the deficit.

“Risks to our rating remain tilted toward the downside as the effects of the COVID-19 pandemic and government responses on the economy, budget, and financial markets evolve,” the agency said in a statement.

Frydenberg on Thursday reported the biggest budget deficit since World War Two as the coronavirus crisis knocks the country into its first recession in three decades.

Reporting by Wayne Cole; Editing by Jacqueline Wong

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