Correction: Fitch Ratings: Aus, NZ Public Finances Weaken Amid Coronavirus

(The following statement was released by the rating agency) Fitch Ratings-Hong Kong/Singapore-April 06: This is a correction of a Fitch Wire published on 6 April 2020, to reflect a revision in the scale of New Zealand's fiscal stimulus to 6.3% of GDP, from 5.3% of GDP stated previously. Fallout from the coronavirus pandemic will exert pressure on credit metrics in Australia (AAA/Stable) and New Zealand (AA/Positive), but our ratings assessments will also take into account the record of prudent fiscal management in both countries, says Fitch Ratings. The pandemic will have substantial effects on the metrics that feed into our Sovereign Rating Model for both Australia and New Zealand. Public finances in particular have been affected. Government spending will be pushed up by massive stimulus packages, while revenues will fall as economic activity is dampened by government lockdowns designed to curb the spread of COVID-19. Australia's federal government has unveiled fiscal measures equivalent to around 9.5% of GDP, with state administrations adding support worth a further 0.3%. New Zealand's stimulus is equivalent to around 6.3% of GDP. It is possible that further fiscal relief may be announced in both countries. Australia and New Zealand both have a degree of fiscal space relative to their rating categories. New Zealand's general government (GG) debt-to-GDP ratio, at around 27%, is significantly lower than that of Australia at about 41%. This suggests that New Zealand has significantly more headroom to relax fiscal policy within its current 'AA' rating band (where the median GG debt-to-GDP ratio is 40%) than Australia does in its AAA band (where the median is 44%).