Updated May 29, 2018 07:00:46 Australia is on the verge of a debt crisis, and it could have a very big impact on the way it manages its finances, analysts have warned.
Key points:Key pointsThe Government has said it would seek a bailout of $5.4 trillion from international lendersThe Reserve Bank has warned the debt could hit the budget within two yearsIf the Government doesn’t do more to address the debt crisis in the next few weeks, it could see a large jump in interest rates over the next two years, leading to higher borrowing costs for consumers and businesses.
In the meantime, the Government is warning that it would be willing to use its powers under the constitution to “negotiate” a rescue, but it has not set a timeframe for such a deal.
“There is a huge amount of uncertainty around what we might see as a response,” said Chris Evans, an economist at Commonwealth Bank.
“The risk is that we might get the sort of debt-management regime that was negotiated last time out that we’ve had since the debt was raised.”
That would mean debt would go up, interest rates would go down, and the deficit would come down, but then there would be a lot of uncertainty about whether or not there would even be a recovery.”‘
We will seek a solution that delivers a return on our investment in our national infrastructure and the growth of our economy.””
The Government’s plan for addressing its debt crisis is to work with international lenders to negotiate a bailout,” the Government said in a statement.
“We will seek a solution that delivers a return on our investment in our national infrastructure and the growth of our economy.”
A solution that reduces the risk of the economy overheating, that ensures Australians can continue to live comfortably while maintaining our economic growth, and that ensures that we remain debt-free for future generations.
“But the Opposition has accused the Government of being too weak and lacking leadership, and of being unable to deal with the problem.”
It’s a massive risk to the country, to our economy and to our financial system, and they’re afraid to be bold,” Mr Evans said.”
They’re afraid that they’ll just fall behind and they’ll get caught up in the panic of a whole lot of other problems, and then they’ll fall behind.
“This is a very, very difficult situation to be in and it’s a very difficult country to be living in.”
The Government says the Government will “negotiation” a deal with international investors that would involve a $5-billion (about $3.2-billion) bailout from international banks.
The Government will then have to pay the debt in the future through a series of debt repayments and tax cuts, or the Treasury could impose a levy on Australian banks to cover the cost.
In its latest budget, Treasurer Scott Morrison promised a $6 billion “bailout” to address Australia’s debt problem.
However, he said he would only negotiate with “international lenders” if they offered “a fair and sustainable” plan for debt relief.
“I will negotiate with international banks if they are willing to agree to a fair and credible solution for debt-related reform, in a way that minimises the risk to our country,” Mr Morrison said.
But the Government’s budget also promised a series