(4 July 2016 – Australia) Australia may be at risk of losing its long held AAA credit rating, following last weekend’s federal election.
The uncertain outcome of Saturday's vote increased fears the country may be exposed to a government stalemate and not be able to work on budget reform.
Australia's debt levels, while relatively low on a global scale, have been heading in the wrong direction for years. All the most ambitious attempts to right the fiscal ship have been sunk by the ruling coalition government's lack of power in the upper house Senate.
Having been a consistently highlighted achievement by multiple governments in the recent times, a downgrade would be a political nightmare for whatever party assumes government. Only 10 nations have the top rating from all three of the major agencies.
The Labor party has said that Australia losing its perfect rating would “be a blow to confidence” and could lead to a rash of downgrades for Australian banks and companies.
Standard & Poor's has been conspicuous in its silence since Treasurer Scott Morrison handed down his 2016/17 budget in May, prompting market speculation that it was considering changing Australia's outlook to negative.