Australia Treasurer Says Budget Surplus Remains Country's Best Defense
First Published Sunday, 22nd April 2012 03:24 am - © 2012 Dow Jones
MELBOURNE -(Dow Jones)- Global economic turmoil has made returning Australia's federal budget to surplus more difficult, but a surplus remains the best defense against macroeconomic factors, the country's treasurer and deputy prime minister said Sunday.
Wayne Swan, in his regular economic note, added that those people who have been calling for further interest-rate cuts should also be calling for a budget surplus, not opposing one.
The global financial crisis and global turbulence had "ripped" at least A$140 billion from government revenue, Swan said.
"This doesn't change the fact that getting back in the black is the right course of action for an economy moving toward trend growth, with low unemployment and a record pipeline of investment," Swan said. "Despite Australia's strong fundamentals, we know very clearly that we are not immune from global developments."
The treasurer reiterated a commitment to a surplus in the mid-year budget last November. He said Sunday that this ensures the government isn't adding to price pressures in the economy, and gives the Reserve Bank the maximum flexibility to cut interest rates if it thinks it is necessary.
The treasury in a statement Saturday said Australia, Singapore, Korea and the U.K. would make contributions to the International Monetary Fund by way of contingent loans or note-purchase agreements. Australia will contribute US$7 billion of the combined US$41 billion, it said.
"First and foremost, Europe needs to get its own house in order, but it is also critical that the IMF has the capability to address any potential vulnerability facing the global economy, whether that be in Europe or elsewhere in the world, including our own region," Swan said.