The ratings on Victoria are supported by the state's strong balance sheet, diversified economy, ongoing fiscal discipline and strong system support. These strengths are offset, as with all Australian states, by an institutional framework that contains a degree of vertical fiscal imbalance. Victoria's balance sheet is strong. This provides the state with the flexibility to increase debt without jeopardizing its rating. While Victoria's current policy favors partial debt-funding of its capital program, Victoria's debt levels are expected to remain consistent with the rating. Even after factoring in the state's increased debt, Victoria's balance sheet, including its unfunded superannuation liabilities, is expected to remain strong. The government's strong financial management provides ongoing financial stability. Victoria's good governance--including its strong fiscal strategy
