...MELBOURNE (S&P Global Ratings) May 3, 2022--Today's 2022-2023 budget from the Australian State of Victoria (##/Stable/A-1+) marks a strong economic recovery after the COVID-19 pandemic. Nevertheless, after-capital account deficits and rising debt levels remain key downside risks to our ratings on the state. Household consumption and business investment have rebounded since the easing of lockdown restrictions in the state. We forecast the economic recovery to improve Victoria's cash operating balances. However, a large infrastructure budget will ensure large after-capital account deficits drive debt higher. Our '##' rating on Victoria is based on our expectation that the state's very large after-capital account deficits will start to narrow over the forward estimates. Victoria's operating position could broadly balance as early as fiscal 2023, driven by property and payroll taxes and operating expenses normalizing after the pandemic. This will help the state to fund its new policy decisions,...
