Australia’s Public Debt Rises, Budget Deficit Set to Soar

Increased fiscal stimulus measures have pushed Australia’s public debt to almost 25% of GDP, especially due to higher welfare payments as unemployment soared because of the coronavirus pandemic and ensuing lockdown. According to Treasurer Josh Frydenberg, government debt for a year until June rose to AUD 491.2 billion, around 24.8% of the Australian GDP.

The public debt figures beat the official forecast, which was for a reading of AUD 488.2 billion – 24.6% of the GDP. For the year ending in June 2019, it stood at 19.2% of GDP.

Australia’s budget deficit for the previous financial year is expected to have touched AUD 85.3 billion. In this financial year, it could rise further, to AUD 185 billion – more than thrice as high as the record high of AUD 54.5 billion during the 2008-09 financial crisis.

With Australia facing its first recession in nearly three decades, Frydenberg’s hopes for a surplus in the budget have been dashed as the economy could need more fiscal support. The unemployment rate in Australia has risen to 6.8% in August and is forecast to touch 10% in the coming months. Fiscal stimulus measures could continue until unemployment comes back under 6%.