Treasurer Jim Chalmers said inflation remains persistent; federal and state government budgets will be in deficit until at least the end of the decade, IMF says. Follow updates here
Federal and state government budgets will be in deficit until at least the end of the decade, with the International Monetary Fund warning the cost of servicing mounting levels of public debt will drain a steadily increasing amount of government resources.
The IMF predicts the general government interest bill, which includes the cost of servicing Australian federal, state and local government debt, will consume 1.8 per cent of gross domestic product by 2028. That is more than double the size of the interest bill in the years leading up to the pandemic, when debt was rising but interest rates were lower, and triple the size of the interest bill about a decade ago.
The release of the report comes ahead of high-level talks in Washington, where Treasurer Jim Chalmers will meet his international counterparts to discussSpeaking before his departure on Wednesday, Dr Chalmers said the federal budget had structural issues because of the growing debt bill, the rapidly expanding National Disability Insurance Scheme, as well as spending pressures from health, aged care and defence.
“All of these costs are putting pressure on the budget. There is a structural problem and we need to deal with it,” Dr Chalmers said.
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