Australia’s annual budget preview - NAB
|Analysts at National Australia Bank (NAB) provides insights on what to expect from the upcoming Australia’s federal government budget due to be announced later on Tuesday.
Key Quotes:
“We expect an underlying cash balance of $23-25bn in 2017-18, some $4-6bn better than predicted at the Mid-Year Budget review (MYEFO).”
“The Government is likely to continue to focus on gradual improvement in the balance, so as to build fiscal flexibility, maintain the AAA credit rating (which we think is unlikely to be affected after this Budget) and not upset the recovery.”
“The global economic backdrop is improving which will be helpful. Most focus/debate is likely to be over the extent to which the government assumes wages growth and consumption will strengthen, given current low wages growth.”
“The Treasurer has already re-committed to using conservative commodity price assumptions, which is good practice and delivered an upside surprise last year in place of the downside surprises that have been commonplace in the past 4-5 years.”
“Three initiatives likely in this budget are: (i) a Housing Affordability package; (ii) an increased focus on the Net Operating Balance (which compares recurrent expenditures and revenues); and (iii) a related categorization of debt into good and bad debt, the latter designed to highlight that borrowing is OK for infrastructure and productivity-enhancing purposes, but not for day-to-day spending.”
“It's also quite likely that the Government will announce or foreshadow increased infrastructure spending (eg Sydney's Second Airport, the Inland Rail project), some of which may be "off-budget".
“Ratings agencies will likely continue to focus on general government sector debt when considering Australia's AAA rating, not government business enterprises, such as the NBN.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.