Australia to raise debt ceiling by two-thirds

Australia plans to raise the country’s debt limit by two-thirds to allay concerns it could face a future fiscal crisis.

The newly-elected conservative government is looking to raise the borrowing limit to A$500 billion ($486 billion).

Australia is forecast to reach its current A$300 billion ceiling in December.

Treasurer Joe Hockey said that he wanted to avoid a crisis similar to the recent US fiscal emergency.

“The debt limit needs to be set so as to provide sufficient headroom to ensure there is stability and certainty for the financial markets about the government’s capacity to finance its operations for the foreseeable future,” Joe Hockey said.

“We need not look any further than the recent events in the United States to realize how imperative for stability and certainty is for confidence.”

Treasurer Joe Hockey said that by raising Australia’s debt limit he wanted to avoid a crisis similar to the recent US fiscal emergency

Earlier this month, the US government was partially shutdown for 16 days after the Democrats and Republicans were unable to reach an agreement over the country’s budget and raising the debt ceiling.

The situation was resolved last week after Congress hammered together a last-minute deal to temporarily raise the debt limit until the end of the first week of February 2014.

However, financial markets were rattled by the US political deadlock, which brought the country closer to the possibility of defaulting on its debts.

There was little reaction in the Australian financial markets to Tuesday’s announcement.

Australian government debt is popular among many investors because of its top AAA credit rating.

That means it is regarded as the safest kind of investment by the ratings agencies looking at the risks associated with government borrowing, as well as for companies.

At the same time, Australia’s total debt, expressed as a percentage of its total economic output (GDP), is relatively low compared to other developed nations.

According to the International Monetary Fund (IMF), Australia’s debt is expected to be around 30% of its GDP this year, compared to nearly 106% for the US.

Joe Hockey said that the government was keen to keep its debt levels in check.

“We are not going to allow ourselves to get into the position that the United States is in where there’s tremendous uncertainty about the capacity of a country to live within its means,” he told the Australian Broadcasting Corporation.

Australian PM Tony Abbott is set to hold his first parliament sittings in late October, which will give the government up to six weeks to pass the legislation required to raise the debt limit.

The government is also set to face an audit commissioned by the Treasury, which is aimed at streamlining government services and reducing wasteful spending.

VRyu-hGqwmI
Clyde K. Valle

Clyde is a business graduate interested in writing about latest news in politics and business. He enjoys writing and is about to publish his first book. He’s a pet lover and likes to spend time with family. When the time allows he likes to go fishing waiting for the muse to come.

Recent Posts

Donald Trump and Elon Musk Celebrate Election Victory at UFC 309

Image source: Wikimedia Commons President-elect Donald Trump celebrated his election victory at the Ultimate Fighting…

5 days ago

White House 2024: Donald Trump Wins, Kamala Harris Calls Him to Concede Election

Millions of voters across the US chose to return Donald Trump to the White House…

2 weeks ago

Who Won? Donald Trump Declares Victory as He Addresses Jubilant Supporters in Florida

Donald Trump declares victory in the US election as he addresses jubilant supporters in Florida.…

2 weeks ago

Stocks Soaring as Donald Trump Closes in on US Victory

Stocks around the world are rising as Donald Trump appears to be on the cusp…

2 weeks ago

Who Won? Kamala Harris Cancels Election Night Party as Path to Victory Narrows

Donald Trump has won Pennsylvania, North Carolina and Georgia and taken a lead over Kamala…

2 weeks ago

Quincy Jones Dead at 91

Quincy Jones, the celebrated musician and producer who worked with Michael Jackson, Frank Sinatra, Ray…

2 weeks ago