The Australian government announced on Thursday that the country is facing its largest budget deficit since the Second World War. Finance Minister Mathias Cormann and Treasurer Josh Frydenberg declared an update on the nation's fiscal and economic conditions amid the ravaging COVID-19 pandemic.
Frydenberg, however, said that the strain was "manageable" due to interest rates that are record-low. "Australia is experiencing a health and economic crisis like nothing we have seen in the last 100 years," he told the media on Thursday.
Deficit Growth Project
They revealed that the budget deficit for the financial year 2019/20 was A$85.8 billion ($61.2 billion). The deficit is projected to grow to A$184.5 billion in 2020/21. Australia's debt will grow to A$677.1 billion, more than a third of the GDP by June 30, 2021, reported Xinhua news agency.
"We will get through this and we will get through this together," Frydenberg added. The government has delayed announcing the Federal Budget for 2020/21 until October on account of the pandemic.
According to Treasury projections, Australia's unemployment rate will be above 9 percent by the end of the calendar year 2020, up from 7.4 percent in June, while the GDP will fall 3.75 percent in 2020. "These harsh numbers reflect the harsh reality we face," Frydenberg said.
Providing Economic Support
"How we manage future cases of coronavirus will be absolutely key to the economic recovery, both the speed and trajectory," Frydenberg added. According to an official update, the government has acted to provide economic support for workers, households and businesses of around A$289 billion or the equivalent of 14.6 percent of the GDP, including about A$86 billion for the "JobKeeper" wage subsidy scheme.
Frydenberg said that the measures saved 700,000 jobs. "Without the government's economic support, unemployment would have been 5 percentage points higher," he said.
Income from tax fell A$31.7 billion in 2019-20 and are expected to fall a further A$63.9 billion in 2020/21. "We are in a challenging position, there is no sugar coating this. We did what we had to do given the economic fallout of this one in a hundred-year pandemic," Cormann said.
(With inputs from agencies)