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The National Fiscal Outlook (NFO) report

The National Fiscal Outlook EFO) projections indicate a significant improvement in the national fiscal outlook is in prospect over the next few years under current fiscal policy settings.

On an underlying and consistent basis, the report shows that the combined Commonwealth/State general government deficit is expected to decline from 4.2 per cent of GDP in 1993-94 to a surplus of 0.2 per cent of GDP (under the higher growth scenario) and a deficit of 0.8 per cent of GDP (under the lower growth scenario) in 1997-98.

The Commonwealth general government deficit is projected to decline significantly over the projection period, and accounts for almost all of the decline in the aggregate deficit.

The aggregate State/Territory position is expected to move from a small deficit to a small surplus over the projection period; a significant achievement.

The general government net debt to GDP ratio is projected to reach a high point and subsequently fall, primarily reflecting movements in Commonwealth net debt. The State/Territory net debt to GDP ratio is projected to continue recent declines.

Since the NFO data were compiled, the Commonwealth has announced its commitment to undertake a further structural tightening of fiscal policy in the 1995-96 Budget and achieve a budget surplus in 1996-97, which is not reflected in the NFO projections.

The NFO has been prepared by a working party of Commonwealth, State and Territory Treasury officials to assist Heads of Governments, at the Premiers' Conference, assess the appropriateness of the current stance of national fiscal policy.

The coverage, assumptions and presentation of NFO data differ significantly from those normally presented in budget documents, so that considerable care is required in comparing the fiscal projections presented in this report with those published in annual Commonwealth, State and Territory budgets.

The report presents the national, Commonwealth and State/Territory fiscal outlooks on a comparable basis. The report focuses on underlying trends and abstracts from the impact of asset sales and Commonwealth lending to the States.

Two indicative economic scenarios are used for the projections: a higher and a lower growth scenario.

Copies of the report are available from Australian Government Publishing Service bookshops.

Contact Officer: Michael Clark-Lewis 263 3874