State Of Victoria

This report does not constitute a rating action. Overview Credit context and assumptions Base-case expectations Victoria's economic growth is recovering after pandemic-induced lockdowns. Global uncertainty and rising inflation are tempering forecasts for fiscal 2023. Operating deficits to improve from fiscal 2023 onward. Financial management practices will continue to support the ratings and the delivery of the state's infrastructure program. After-capital account deficits will likely remain elevated as the state carries out its infrastructure program. This will drive debt higher. The state maintains its exceptional liquidity position and wealthy economy. We have updated our forecasts through to fiscal 2025 (year ending June 30, 2025) . We forecast Victoria's operating balance will narrow sharply in 2023, but remain in deficits until 2025.

...We have updated our forecasts through to fiscal 2025 (year ending June 30, 2025) . We forecast Victoria's operating balance will narrow sharply in 2023, but remain in deficits until 2025. After-capital account deficits will improve from record levels, and debt growth will start to slow. After-capital account deficits are likely to persist as the state focuses on large spending initiatives, including a record infrastructure budget, and higher costs given rising inflation. Victoria's debt levels are higher than its peers'. Although we see prospects of fiscal repair, it is unlikely to substantially improve key financial metrics during the next two to three years. Underpinning our '##' rating is our belief that economic growth is recovering and that the state's economy remains structurally wealthy and diverse. Victoria's strong financial management should ensure that liquidity coverage is comprehensive during this period of disruption as the state progresses its prefunding strategy. Australia's...

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