Budget struggling even before stimulus

Colin Brinsden
Westpac economists expect the budget will be in a deficit of $90 billion in 2019/20

The federal budget position was trailing behind forecasts even before the Morrison government announced two massive stimulus packages to help counter the impact of the coronavirus.

The government's financial statement for February released on Friday showed the underlying cash balance at a deficit of $16.3 billion - $2.6 billion larger than had been expected after the first eight months of the financial year.

That forecast was made at the time of the midyear budget review in December, which had also predicted a $5 billion surplus.

The government has since ditched its surplus pledge given the impact of the summer bushfires and COVID-19.

Economists at Westpac expect the budget instead will be in a deficit of $90 billion in this 2019/20 financial year, deepening to $160 billion in 2020/21, taking into account the stimulus measures and a deterioration in the economy, which now faces its first recession in nearly 30 years.

Treasury has given no fresh guidance on the state of the budget.

The release of the federal budget has been put back to October from May.