State of Victoria

This report does not constitute a rating action. Overview Credit context and assumptions Base-case expectations Victoria's economy should remain wealthy and resilient amid soft domestic conditions and high interest rates. Victoria will continue to remain in cash operating surplus with large deficits after capital accounts as it continues its record infrastructure program. Fiscal discipline will be key to maintaining the ratings and containing costs of the state's large infrastructure program. Debt will continue to accumulate, reflecting Victoria's large infrastructure program and escalating costs. Australia's institutional settings for states and territories remain extremely predictable and supportive. The state will maintain strong liquidity coverage aided by its access to external markets. We have updated our forecasts for Victoria following publication of the

...We expect Victoria's operating position to weaken over the next 12 months. We have updated our forecasts for Victoria following publication of the state's midyear 2025 budget update in December 2024. The midyear budget update indicated Victoria is using increased revenue and new taxation receipts to partly fund additional operating and capital spending. We estimate operating expenditure will rise close to 9% in fiscal 2025 (ending June 30, 2025), compared with our previous forecast of 3%. Strong revenue growth of about 8% in fiscal 2025 will mostly offset this. Economic outcomes, rising grants, and new taxes support growth in revenue. The government is increasing and rebranding its fire service levy (known as the emergency service and volunteers fund) and congestion levies....

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