AOFM reveals total 2019/20 requirement following MYEFO

On 17 December, following the release of the Australian government’s mid-year economic and fiscal outlook (MYEFO) on the previous day, the Australian Office of Financial Management (AOFM) revealed it expects gross Treasury bond issuance for the 2019/20 financial year to be around A$55 billion (US$37.8 billion), down from an estimate of A$58 billion in the April 2019 budget.

The AOFM says A$27.2 billion of the funding requirement has already been completed. It expects to establish a new, May 2032 bond line prior to the end of the 2019/20 financial year. The AOFM also intends to undertake a further A$1-1.5 billion in issuance of Treasury indexed bonds.

The announcement followed a MYEFO in which the budget position of the Federal government was weakened by a softer economic outlook. Surpluses forecast across the forward estimates have been reduced since the budget. Net debt is still expected to continue to decline over the forward estimates (see table).

Australian budget fiscal and net debt outlook

 2019/202020/212021/222022/23
Underlying cash balance at 2019 budget (A$bn) 7.1 11 17.8 9.2
Underlying cash balance at 2019 MYEFO (A$bn) 5 6.1 8.4 4
Net debt at 2019 MYEFO (A$bn) 392.2 379.2 364.5 360.8
Face value of government securities on issue 2019 MYEFO (A$bn) 556 558 576 576

Source: Budget papers, 17 December 2019