The federal government will borrow more money than the states for the first time since the pandemic this financial year, according to new projections by Westpac, adding pressure on Treasurer Jim Chalmers to plug the budget deficits at the upcoming economic reform roundtable.

The shift comes even as the states themselves are projected to borrow a near-record $115.8 billion collectively over the next 12 months, and credit ratings agencies weigh whether to downgrade the NSW, Queensland, Tasmanian and ACT governments to the same standing as Victoria.