Standard and Poor's has removed Western Australia's credit rating from credit watch, but the outlook remains negative.
S&P placed WA on CreditWatch three months ago when the ratings agency also revised its forecast for iron ore for the rest of the calendar year to $US45 per tonne.
In its budget in May last year, the WA government assumed an overly optimistic price of up to $US123/t, but in this years's budget, the projection for 2015/16 had fallen dramatically to less than $US48/t.
S&P said on Tuesday that revised forecast was now broadly in line with its assumptions, while the WA government's exchange rate expectations also fit in with market consensus.
"Along with iron ore prices, though, Australian dollar movements will remain an important source of revenue risk," S&P said.
It affirmed WA's AA+ rating, saying there was a one-in-three chance of a downgrade over the next two years "because there is limited scope for the budget outlook to deteriorate further at the current rating level".
"We could revise the outlook to stable if the government broadly achieves its savings measures," S&P said.
