Treasurer Scott Morrison can breath a sigh of relief in the knowledge Australia is not about to be downgraded by at least one global credit rating agency.
Moody's Investors Service is sticking with its triple-A rating on Australia with a stable outlook, saying the country's debt burden is no worse than other countries that hold the top tier rating.
In its regular update on Australia it says the nation's strengths are its economic resilience in an uncertain global environment, a very robust institutional framework and a stronger budget position than many similar rated peers.
It concedes the government will face political hurdles in implementing its fiscal tightening, as it rules with a very thin majority in the House of Representatives and a splintered Senate.
"However, Australia's debt burden will remain consistent with an AAA rating ... general government debt will be lower than in Canada or the Netherlands, and not significantly higher than Denmark or Sweden's - all AAA stable," Moody's said on Wednesday.
It does warn Australia's high and rising household debt leaves the economy and banking sector vulnerable to negative shocks and remains vulnerable to a downturn in commodity prices and a slowdown in China.
However, Moody's believes Australia's economic growth potential is higher than most top-rated economies.
"Population growth is stronger, ageing is slower, and financial provisions for a greying population are more substantial than in many advanced economies," the agency says.
It believes the shift in economic activity from mining to services will lift GDP growth in the range of 2.5-3 per cent from 2017 onwards.
There have been fears of Australia being downgraded as budget deficits have been difficult to unwind and government debt has ballooned, not helped by the unexpected growth downturn in the September quarter which left annual growth at just 1.8 per cent.
