Australia Has A$27.1 Billion 2008-09 Budget Deficit

Sept. 29 (Bloomberg) -- Australia’s budget deficit for the year ending June 30, 2009, was A$27.1 billion ($23.7 billion) Treasurer Wayne Swan said. This compares with a A$32.1 billion forecast he made in May.

“This stronger-than-expected outcome is the result of a combination of various one-off factors and the effects of the government’s economic stimulus,” Swan said today in Canberra.

Interest rates at a half-century low, government spending on roads and schools, plus handouts to consumers helped the economy expand 1 percent in the first half of this year, boosting earnings at retailers such as Woolworth’s Ltd. Australia’s net debt was A$16.1 billion, which was A$11.5 billion less than forecast in May and equivalent to 1.3 percent gross domestic product.

“Our fiscal situation here is in a lot better shape than in most other Western economies,” said Sally Auld, an interest- rate strategist at JPMorgan Securities Ltd. in Sydney. “Fundamentally, it’s a good thing.”

Australia’s debt level contrasts with major advanced economies that reported debt equal to 59 percent of GDP in 2008, Swan said.

The Australian dollar traded at 87.25 U.S. cents at 11:17 a.m. in Sydney from 87.26 cents just before the figures were published. The two-year government bond yield was unchanged at 4.30 percent.

Stimulus Defended

The government has this month been forced to defend the size and timing of it’s A$42 billion stimulus package against claims by the opposition Liberal party that it’s too large.

“The truth is that stimulus has kept customers coming through the doors of businesses,” Swan told reporters in Canberra. “That’s meant more Australians in jobs and less collecting unemployment benefits that would otherwise have been the case.”

Total tax receipts were A$3.3 billion higher than estimated in May, helped by extra revenue from company earnings, Swan said.

Today’s report “doesn’t substantially diminish the fiscal challenge facing the country, or alter in any way the government’s determination to stick to the fiscal strategy,” he said.

The deficit for the year ending June 30, 2010, will be A$57.6 billion and a further A$129.8 billion of deficits are projected for the three fiscal years after that, Swan said in May. Those figures were not updated today