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Swan says Australian credit rating safe

His comments come after Standard & Poor’s (S&P) overnight downgraded its credit rating for the US from AAA to AA+, the first time in history the US rating has been downgraded.

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Mr Swan said Australia had known for some time the US faced a long and painful adjustment to get its budget back on a sustainable medium-term footing.

“But they’ve taken an important first step towards this objective,” he said.

“S&P’s announcement comes amid heightened volatility over the past week in international financial markets driven by continuing concerns about the weakness of the US economic recovery and sovereign debt levels in Europe.”

Mr Swan said Australia was not immune from events in the rest of the world but the Australian economy’s fundamentals remained strong.

He said unemployment was low, public finances were strong with very low debt and a huge pipeline of mining investment.

“Australia’s gold-plated AAA-rating is safe and secure,” he said.

“It’s been recently affirmed and we are widely considered to be in the top-tier, even amongthe exclusive club of developed economies in the world to share the highest rating.”

Mr Swan said Australian net debt would peak at less than one-tenth of the major advanced economies and the budget would be back in the black in 2012/13.

“Our fiscal situation couldn’t be more different from the United States,” he said.

“We also have a strong, stable and efficient parliament which has so far passed over 160 pieces of legislation through the lower house and 130 through both houses of parliament.”

Mr Swan said the parliament had just about passed the budget in full, a budget that included the biggest fiscal consolidation in the nation’s history.

“We’re located in the right part of the world at the right time. The prospects for our region remain much stronger as the weight of global activity continues to shift from West to East,” he said.

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