By Lewis Jackson
SYDNEY (Reuters) - Australia has lowered its forecast for the cost of servicing government debt over the next three years, though the government still sees annual repayments rising to a peak in fiscal 2025/26 before declining slightly.
Interest payments on Australian government securities are forecast to total A$85.8 billion ($57.18 billion) between fiscal 2022/23 and 2025/26, according to an extract of next Tuesday's budget seen by Reuters. Similar figures last October totaled A$95.7 billion over the same period.
Record prices for commodities, the lifeblood of the Australian economy, will help Treasurer Jim Chalmers pay for tax cuts, interest bills, and more spending on childcare and health, when he presents a budget next Tuesday. The reduced forecast for debt servicing will provide additional breathing room in the budget.
"The cost of servicing the debt left behind by our predecessors is one of the fastest growing pressures on Tuesday’s Budget," Chalmers said on Thursday.
"We’ve made substantial progress when it comes to repairing the Budget and we’ll continue our efforts in the Budget."
(GRAPHIC - Breathing room: Australia's rising debt bill moderates: https://www.reuters.com/graphics/AUSTRALIA-DEBT/egpbybxdqvq/chart.png)
Interest payments are forecast to rise steadily to a peak of A$27.1 billion in fiscal 2025/26, up from A$17.7 this fiscal year. Payments are then forecast to dip to A$26 billion in fiscal 2026/27.
The total cost over the five years is set to be A$112 billion, more than the government spending on infrastructure or childcare, according to the same budget extract.
($1 = 1.5006 Australian dollars)