NSW, Vic stripped of AAA credit rating due to severe COVID-19 economic shock

Victoria and NSW have been stripped of their AAA credit ratings, reflecting the severe economic and fiscal blow dealt by the COVID-19 pandemic.

Both NSW and Victoria have lost their prized AAA credit ratings.

Victoria and NSW have both lost their prized AAA credit ratings, reflecting the severe economic and fiscal blow dealt by the COVID-19 pandemic.

S&P Global Ratings on Monday lowered Victoria’s rating to AA and NSW’s to AA+.

“Unlike other Australian states, Victoria experienced a ‘second wave’ of coronavirus infections and is suffering a longer and more severe hit to the economy and government finances as a result,” the ratings agency said.

“The COVID-19 pandemic is weighing heavily on Victoria’s finances.

“We forecast operating revenues, especially conveyance duties, payroll tax, and goods and services tax (GST) grants, to be much lower than our previous expectations.

“Operating expenditures have also increased relative to our previous forecasts as the government responds to the pandemic with higher health spending and provides support for individuals and businesses.”

On NSW, S&P said the downgrade mainly reflected expectations the state’s debt burden would rise substantially during the next three years.

“We expect NSW to post a historically large after-capital-account deficit this fiscal year, though the deficit should narrow in future years,” the agency said.

“NSW has a higher degree of flexibility than its peers, with some potential upside to our deficit and debt projections from unbudgeted asset sales and expenditure reviews.”