A stochastic debt sustainability analysis of Budget 2022
This report provides a stochastic debt sustainability analysis of the medium-term outlook presented in Budget 2022.
Given our approach to drawing future debt drivers from a historical sample, our projected distributions for debt, deficit and debt service ratios should not be viewed as forecasts. Rather, our approach should be seen as providing a stress test of the Government’s financial position over the medium term.
However, our results also suggest it is highly unlikely that the gross debt-to-GDP ratio will return to its 2019-20 pre-pandemic level by the end of the medium-term planning horizon in 2026-27. We also estimate that there is a 69% chance that the budgetary deficit-to-GDP ratio in 2026-27 will exceed Budget 2022 projections.
Parliamentary Budget Officer