Western Australia continues to hold a AAA local and foreign currency ratings given by Standard & Poor's Rating Service but that score could be under threat in 2012.
The ratings firm today said risks to the rating could increase in around five years time given that WA expects its surplus to reduce in fiscal 2012.
"The forecast of a small surplus in 2012 is based on an assumed winding-back of commodity prices and a reduction in Commonwealth grants, and it is still several years away," S&P credit analyst Danielle Westwater said.
Today the firm affirmed WA's AAA local and foreign currency long-terms ratings, and the A-1+ short-term ratings on the guaranteed debt issued of the Western Australian Treasury Corporation.
The ratings reflect the state's low net financial liabilities compared with peers, strong cash and accrual operating surpluses, prudent fiscal management, and the strong system of government support in Australia
"The state's operating performance has been exceptional," Ms Westwater said.
"The strong commodity markets have significantly boosted the state's economic growth and it continues to manage the economic boom within conservative financial parameters.
"There is some short-term risk of a reversal of the strong mining conditions, which would have a large and unexpected shock on revenues. There is also some risk associated with expenditure given the state's historical difficulties with cost control.
"Nevertheless, a negative impact on the rating is unlikely given that the state has forecast large surpluses up to 2011 and its consequential headroom to manage unexpected revenue shocks."
