Budget Update On The Horizon

It’s a terrible name, and this year, the content is slated it be terrible as well. Its MYEFO! which is generally pronounced phonetically, and which stands for Mid-year Economic and Fiscal Outlook.

MYEFO is a mid-year budget update, which outlines the financial position of the Australian Government. This year’s edition is scheduled to be released next Monday, 19th of December.

MYEFO has been highlighted in an increasing number of reports from the Australian press over the past few days, as the credit ratings agencies Moody’s and S&P Global Ratings are warning the government that they are in danger of losing Australia’s AAA credit rating.

They have also warned the government not to sugar coat or spin the budget forecasts, due to their concerns that savings and spending measures will struggle to pass a fracture senate.

It is expected that the projected budget deficit for this financial year will triple, whilst the budget deficit in the 2015-16 financial year was eight times higher than the Liberal coalition’s initial projections.

Moody’s senior vice president for sovereign ratings, Marie Diron defended her agency’s position, stating that “We expect slower nominal GDP growth that will translate into lower revenue for the government and with not much room for manoeuvre for spending cuts,”

Indeed, according to a quote from bond specialist Angus Coote, which was reported in ABC news yesterday, there is a ‘reasonably high’ chance (of 30 to 40 percent) that AAA will be lost pre-Christmas.

According to Dr Jim Chalmers, the Labor Party financial spokesman, ‘If this chaotic and clueless government was serious about budget repair and protecting our AAA rating, it would immediately ditch its $50 billion tax gift for big multinationals and the banks,’

However, the government instead appears to be targeting the other end of the economy, and is floating the idea of ditching the $100 note. They say the move is targeted at those doing unrecorded cash in hand work, particularly those who may also be on welfare.

Regardless, it seems that much work must be done to stem the blowouts in the budget deficit.