UPDATE: Queensland has narrowly avoided a credit rating downgrade, but the state’s financial outlook remains troubling, according to S&P Global. The ratings agency has affirmed a negative outlook for Queensland, warning that its “very weak” budgetary condition is set to trigger a further surge in state debt.
In a statement released Friday, S&P Global confirmed that Queensland’s total debt is projected to balloon to $205.7 billion by 2028-29. This news is both a political and monetary win for Treasurer David Janetzki, who has worked diligently since taking office nearly a year ago to avert a downgrade that would escalate interest rates on state debt.
Despite the reprieve, S&P’s director of government ratings, Anthony Walker, painted a dire picture for Queensland’s finances. “Queensland’s fiscal outcomes are very weak compared with peers,” Walker stated, highlighting expectations of modest operating deficits and significant deficits after capital accounts over the next two years.
The recently released June budget forecast deficits for each of the next four years, yet Janetzki has remained optimistic, asserting that the new government’s approach will guide Queensland “on a path to surplus.” This hopeful messaging may have contributed to S&P’s decision to maintain the current rating, with a potential return to surplus flagged for 2028.
The implications of these developments are profound. A credit downgrade could have triggered higher borrowing costs, impacting public services and infrastructure investments across Queensland. Janetzki has actively engaged with rating agencies to stabilize the state’s fiscal position following an election marked by extensive spending commitments from all political sides.
As Queensland braces for rising debt, officials are now tasked with addressing the underlying budgetary challenges. The urgency to implement effective fiscal measures is critical as the state looks ahead to navigate its economic hurdles.
In the coming months, stakeholders will closely monitor Queensland’s financial strategy and its ability to return to a sustainable surplus. The state’s next moves are crucial in shaping its economic future and maintaining investor confidence.
Stay tuned as this story develops.
