The Australian government has promised to return the nation’s budget to a surplus of A$1.5 billion ($1.53 billion) as early as the next financial year, but a ratings agency, an analyst, and the opposition party told CNBC on Wednesday that it may not be easy for it to keep its word.
“The government has seen massive slippage in terms of fiscal consolidation over recent years. This is going to be the ultimate test,” Gavin Stacey, Australia and New Zealand Rates Strategist at Barclays Capital told CNBC Asia’s “Squawk Box" .
He added that while returning the budget to surplus makes sense, trying to achieve that regardless of what the economic conditions are and to do it in one year is going to be difficult. “We have trouble with the budget strategy, in that it seems so unconditional,” Stacey said.
Treasurer Wayne Swan said on Tuesday that the Budget would finally be able to return to a surplus for the year to June 30, 2013 after four consecutive years of deficits.
However, Joe Hockey, Shadow Treasurer from the Liberal Party, said this surplus is dependent on Australia’s ability to raise enough revenues to offset a bigger-than-expected deficit in the current financial year ending June 30, which is expected at A$44.4 billion, more than the November forecast of A$37.1 billion.Page 1 of 3 | Next Page