We expect the general government's fiscal balance to narrow during the next few years after recording a deficit of about 14% of GDP in fiscal 2021 because of the COVID-19 pandemic. Large economic stimulus packages will support Australia's economic recovery, but fiscal deficits will persist and debt levels will be elevated for years to come. Our ratings on Australia benefit from the country's strong institutional settings, its wealthy economy, and monetary policy flexibility. External risks are improving, with the country's first current account surplus in about 50 years and steadier terms of trade than the past. We are affirming our 'AAA/A-1+' long- and short-term local and foreign currency ratings. The negative outlook reflects a substantial deterioration of fiscal headroom at
