NO.026
STANDARD AND POORS UPGRADES AUSTRALIA
The Government welcomes the announcement today by Standard and Poors of its upgrading
of Australia’s foreign currency debt from AA to AA+. The announcement constitutes a
strong endorsement by an independent body of the Government’s economic policy
achievements over the last three years.
Standard and Poors pay tribute to Australia’s "favourable economic
performance and prospects, as a result of economic reforms, reinforcing resilience,
flexibility, diversity and competitiveness".
In announcing the upgrade Standard and Poors emphasise the importance of the
Government’s continued commitment to fiscal consolidation and debt reduction. We have
now a transparent medium term policy framework that is delivering strong budget surpluses,
narrowing the gap between domestic saving and investment and hence the current account
deficit.
This announcement is a strong endorsement of the Budget that I delivered just a week
ago.
Standard and Poors also emphasise the importance of Australia’s medium term
framework for monetary policy which, they note, has established a low inflation
environment in Australia.
And they pay tribute to the Government’s strong record of structural reform in the
labour market, in product markets and to the Government’s privatisation program
– including the sale of the remaining two-thirds of Telstra.
The AA+ rating is the second highest rating that Standard and Poors apply to foreign
currency debt. Australia last enjoyed this rating in 1989. Australia’s rating was
downgraded then under the Hawke-Keating Government. The Labor Government also presided
over the loss of Australia’s AAA rating in 1986.
Today’s announcement was very well received by the fund managers and institutional
investors with whom I have been meeting in Hong Kong.
This announcement should be welcomed by all Australians. It signals recognition by the
international community of Australia’s ability to sustain strong, low inflationary,
growth with continued low interest rates.
18 May 1999
Hong Kong
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