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Australia sees a lower peak debt-to-GDP ratio, heralding a decline in projected total debt

Australia sees a lower peak debt-to-GDP ratio, heralding a decline in projected total debt

The Australian government's budget will show a decline in projected total debt this year and forecast a lower peak debt-to-GDP ratio in coming years, the Treasury said on Monday.

Total government debt is expected to be A$904 billion ($598.54 billion) for the year ending June 2024. That is A$152 billion less than the previous government had forecast before its election defeat in 2022, according to a budget excerpt seen by Reuters.

That would save about $80 billion in interest payments over the next decade. Gross debt is expected to be 35.2% of GDP in 2026-2027, lower and earlier than the previous estimate of 35.4% in 2027-2028.

“Because of our efforts, the debt in next week's budget will be much lower than our predecessors predicted,” Treasurer Jim Chalmers said at a news conference Tuesday.

Chalmers is expected to deliver a second surplus budget on May 14, the first double surplus in nearly two decades.

($1 = 1.5103 Australian dollars)