This report does not constitute a rating action. MELBOURNE (S&P Global Ratings) May 20, 2025--Victoria's fiscal outlook is slowly improving after several years of yawning deficits and rapidly rising debt. Today's budget is roughly in line with our previous expectations and highlights the protracted fiscal recovery the state is undergoing following the easing of the pandemic. We expect the state to deliver small operating surpluses annually. Expanding these surpluses will require fiscal discipline because Victoria tends to channel additional revenue into further spending. Today's budget showed Victoria's cash operating deficit over the four years to fiscal 2028 (ending June 30, 2028) widening by about A$240 million compared with December's midyear budget. This is despite revision of state revenue to A$15.3
