Moody's affirms Australia coveted AAA credit rating

Ratings house Moodys Investor Services on Wednesday affirmed Australia's prized AAA sovereign rating, however fired a warning shot to the central government calling for urgent fiscal repair.

"The stable outlook on Australia's rating reflects Moody's expectation that Australia's credit profile and related metrics will remain consistent with a Aaa rating," Moodys' Investors Service senior vice president Marie Diron said in a statement.

The affirmation and stable outlook is based on the assumption that Australia's economic resilience to global shocks will continue, while it has stronger fiscal metrics and institutional frameworks than similarly rated peers, such as Canada and the Netherlands.

However, the rating could come under pressure should evidence of economic resilience diminish, challenging the country's external financing, or hurdles to fiscal consolidation become higher than expected.

All three global sovereign ratings houses had flagged Australia' s coveted AAA credit rating could be downgraded should the central government fail to curb growing debt.

Australian Treasurer Scott Morrison in a statement said maintaining the country's AAA credit rating is paramount and will seek to implement policies that reduce the budget deficit.

"Our triple-A rating helps to keep borrowing costs low for businesses and consumers across the economy, as well ensuring Australia is in a much stronger position in the event of any external economic shocks," Morrision said.

"This is important in an increasingly uncertain and volatile global economy."

Budget reform will be a tough task however after Australia's July 2 election with the likely uncooperative Senate making it difficult for government to implement any serious, and much needed fiscal reforms. Reform measures must pass both the House of Representatives and Senate to become law.

Australia's debt has risen 11.6 percent to 36.1 percent of GDP in the 10-years to June 30 2015, which Moody's forecasts will increase to 41 percent of GDP by fiscal 2018, and just under 45 percent by 2020, though consistent with other similarly rated sovereigns.

(APD)