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Moody's decision



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TREASURER

EMBARGO

STATEMENT BY THE TREASURER, THE HON P.J. KEATING, MP

MOODY’S DECISION

Moody's has announced that it is changing the credit rating of the Commonwealth of Australia from Aal to Aa2.

There is no justification for such a change.

Moody's rates sovereign, or Commonwealth Government, debt yet refuses to recognise t-hat the Commonwealth actually owes no net overseas debt. The Commonwealth’s foreign currency debt stood at $9 1/4 billion at 30 June 1989 much lower than our

international reserves which are around $20 billion.

The Commonwealth has not borrowed for more than two years and is in fact making large reductions in domestic and overseas debt.

In particular, the Commonwealth has repaid nearly $5 billion of debt over the past two years.

Further, every cent of the massive $9 billion surplus secured in the Budget delivered last week will be used to repay debt.

Indeed the Commonwealth's repayments of overseas debt would have been even greater but for difficulties in prizing its stock out of the hands of US and other overseas holders.

In other words, overseas creditors consider Australia a good credit risk.

Australia can and is servicing its debt.

For these reasons the Moody's judgement is ill-founded and vindicates the Government's decision to put Australia's reputation and independence above that of a New York company.

COiMivU 'V ΓΛ Ϊ . ; PARL'AME ‘ ·,Αίχ; ...BRARY iviiCAH

CANBERRA ACT 29 August 1989