It was the second credit ratings downgrade in less than a year, and followed a period of strong growth of the resources sector and increased reliance by the State Government on mining royalties.
Low iron ore prices will likely blow a $1 billion hole in the Western Australian budget, it has been revealed, just hours after it emerged the state had suffered another downgrade of its credit rating due to spiralling debt.
Moody’s commended the Government’s pledge to increase tax rates, and its introduction of a new wages policy for the public sector which caps salary rises to inflation, but warned these steps were not expected to lead to “significant improvements” in the near term.
“Minimal improvement is expected in the financial performance in [financial year] 2014/15, with the gap budgeted to be $1. 6 billion or equal to 5. 7 per cent of revenues, as revenues are forecast to ease in line with slower economic growth,” the statement said.
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