WA’s financial performance topped many domestic and international peers through the pandemic and is expected to remain resilient to external shocks,ratings agency Moody’s Investors Service said on Tuesday.
WA premier Roger Cook.AFR
“We expect Western Australia’s exceptionally strong financial performance and debt management,as well as very strong governance,will continue,” Moody’s vice-president John Manning said.
Treasurer Rita Saffioti said the announcement made WA the only Australian state to have AAA ratings from both Moody’s and S&P Global.
“Western Australia lost its AAA credit rating from Moody’s in 2014. It’s been a long,hard road back,” she said.
“We again confirmed that we are very much focused on managing the finances strongly in this state,in particular making sure that our day-to-day spending is under control to ensure we have the capacity to go and build those infrastructure items around the state,like new hospitals,like new roads and rail.
“We estimate that we’ve saved $4 billion in interest payments by turning the finances around.”
The state’s long-term exposure to carbon transition risk from producing liquefied natural gas (LNG) is expected to be offset by future wealth in battery supply-chain materials needed for electrification.
WA accounted for 12 per cent of global LNG exports and more than half (56 per cent) of Australia’s LNG exports in 2021.
But Moody’s said the state’s mineral resources include commodities considered critical to global decarbonisation efforts,including lithium and rare earths.
Providing a buffer to commodity price cycles,Moody’s said it expects WA to use future windfall gains from high commodity prices to further diversify its revenue base,pay down debt or fund capital expenditure.
The state has also been assessed as vulnerable to climate change-related natural disasters such as water stress and bushfires that can cause material economic disruptions.
In addition to the impact on agricultural production,the state’s dry climate exposes its population to water risk,but that has been offset by investment in desalination plants,groundwater replenishment and water recycling.
Moody’s upgraded the long-term issuer and senior unsecured debt ratings of Western Australian Treasury Corporation to AAA from AA1.
The state’s exposure to environmental risks was assessed as moderately negative.
AAP
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