This year’s budget deficit is on track to be $79.8 billion,the third-largest in history,followed by a $77.9 billion deficit in 2022-23. Long term,without changes in policies,the budget remains in deficit for the rest of the decade and beyond.
Gross debt is forecast to reach a record $906 billion by the end of this financial year,grow to $977 billion in 2022-23 and top $1 trillion the following year. The departments forecast that by 2025-26,gross debt as a share of the economy will start to fall even though in nominal terms the debt will continue to grow.
Since the budget was released,global interest rates have continued to climb on expectations of growing inflation pressures.
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While the two departments did not change the budget forecasts,they noted that whoever wins the election is likely to face higher borrowing costs.
They found if the lift in rates is sustained,interest payments as a share of GDP are likely to be 0.1 per cent of GDP or $2.5 billion higher in 2025-26. Gross debt by the end of 2026 would be 0.5 percentage points higher or almost $13 billion.
The departments also revealed the next parliament will have to pass $54.3 billion worth of measures.