Independent ratings agencies, S&P Global and Moody’s, have provided initial commentary to the market on the Marshall Government’s historic job-creating State Budget 2020-21, which was handed down yesterday.
S&P Global (AA+) reported the Government’s $4 billion economic stimulus (which leverages a further $1 billion in Commonwealth and business investment) as ‘valuable support’ for businesses, despite its impact on debt and deficit.
“South Australia benefits from a strong economy and financial management, which allow the state to absorb some stresses on creditworthiness,” S&P Global’s statement said.
“Job numbers and hours worked are rising relatively strongly because the state has so far been successful at suppressing the spread of COVID-19.”
Moody’s (Aa1, Stable Outlook) said: “South Australia entered the coronavirus crisis from a position of relative fiscal strength…”
“Despite underlying revenue pressures, the state is projecting solid average revenue growth of 3.8% over the four years to fiscal 2024, with business activity supported by key economic and social infrastructure spending.”
Treasurer Rob Lucas welcomed the initial response by the independent ratings agencies to the State Budget 2020-21, which charts a strong path to SA’s economic and jobs recovery – particularly over the next two years – in the wake of COVID-19.
“We welcome the rating agencies’ recognition of SA’s strong economy and fiscal management (S&P) and that SA entered the global pandemic from a position of relative fiscal strength (Moody’s),” said Treasurer Lucas.
“We are investing in the single biggest hit of economic adrenalin from any State Government in SA’s history as well as a record infrastructure spend, and we appreciate the agencies’ review of the Government’s time limited and targeted response to the pandemic challenges.”
Moody’s published its annual credit opinion on July 24, this year and reaffirmed its previous rating for South Australia at ‘Aa1, Stable Outlook’. S&P’s rating for SA remains at AA+.
A large cross-section of industry and stakeholder groups have also come out in support of the Marshall Government’s strong plan to re-invigorate the economy, through a record $16.7 billion infrastructure investment – which create more than 19,000 jobs over the next 4 years.