S&P Cuts Rating Outlook for Australia Owing to Budget Deficit
S&P Cuts Rating Outlook for Australia Owing to Budget Deficit

Australia could lose its AAA rating as on Thursday, S&P Global Ratings lowered its outlook for the country to negative owing to a budget deficits and the probability of a political stalemate due to the elections on Saturday, July 2.

The country is still waiting for the outcome of a probable very close election. Although, right now Malcolm Turnbull seems to be coming to power but whether he will be able to form a majority government is still unclear.

According to S&P, was a one is to three chances that it will lower Australia's credit rating within two years in case it believed that the parliament was not bent on passing legislative measures for savings or revenue measures to slim down or get rid of the budget deficit by the early 2020s.

In a statement S&P said, "Without the implementation of more forceful fiscal policy decisions, material government budget deficits may persist for several years with little improvement. Ongoing budget deficits may become incompatible with Australia's high level of external indebtedness and therefore inconsistent with a 'AAA' rating."

After the news surfaced, the Australian dollar took a hit, falling as low as $0.7464 from as high as $0.7538 prior to the announcement.