Major ratings agency S&P says the improvement in the budget's bottom line is positive but inflation remains stubbornly high.

S&P Global Ratings has had a AAA rating on Australia since February 2003 and the agency confirmed the rating in January, a few months after the Albanese government's first budget.

The agency said strong commodity prices, low unemployment and population growth had improved Australia's deficit but it also warned the handouts in the budget may add to inflationary pressures.

"Further, we expect inflation to be stubbornly higher than the Reserve Bank of Australia's target until fiscal 2026," S&P director Anthony Walker said.

S&P prefers the headline cash balance to get a clear picture of a government's finances, which means the budget is not in surplus by the agency's favoured measure.

Unlike the underlying cash balance, the headline figures includes "off-budget" spending, such as loans, investments and foreign aid.

The agency also expects state and federal government deficits to remain small compared to GDP.

Labor's commitment to banking more than 80 per cent of its revenue upgrades from the strong labour market and high prices for exports was critical to maintaining the AAA rating, Mr Walker said, with Australia facing some lingering long-term challenges.

"Australia's economic and fiscal outcomes are subject to volatile commodity prices, and persistent spending pressure such as on social security and welfare, health, defence, and a rising interest bill."

Moody's Investors Service rates the government as AAA with a stable outlook.

Vice president Martin Petch said the surplus for 2022/23 and shift down in gross debt was in line with the agency's earlier expectations.

"Looking ahead, as reflected in the return to a modest deficit in the forward estimate years, spending pressures will continue particularly in terms of the National Disability Insurance Scheme, defence, aged care support, and health spending more generally, putting pressure on the structural fiscal outlook," he said.

He said the review of large spending areas such as infrastructure was positive.

"More broadly, productivity growth remains a key vulnerability for Australia's long-term economic and fiscal outlook."