Queensland hit with first credit rating downgrade in almost two decades

Queensland’s credit rating has been downgraded for the first time since 2009, in a move which will place further pressure on growing debt repayments.

Ratings agency S&P Global announced on Friday afternoon it had downgraded the state from AA+ to AA amid heightened Olympic infrastructure spending-driven cash deficits.

“Persistent inflation, rising interest rates, higher wages, and softening property market sentiment will likely weigh on Queensland’s budgetary outcomes and fiscal recovery over the next two to three years,” the agency said.

Early word of the looming announcement on Thursday sparked a blame game between federal Labor and the state LNP government under Premier David Crisafulli and Treasurer David Janetzki.

The Crisafulli government’s June budget forecast deficits in each of the three coming financial years, sending debt spiralling from more than $142 billion to almost $216.5 billion by mid-2030.

Queensland was expected to be paying $7.7 billion each year by 2030 just to cover the cost of the debt, but this will climb further after a credit downgrade will increase interest costs.