Insight: AOFM to Stick to Borrowing Plan Despite Downward Revision to JobKeeper

• Published on
• 22 May 2020, 05:47 PM

By Sophia Rodrigues

The Australian Office of Financial Management will stick to the borrowing plan announced in the issuance update despite the downward revision in JobKeeper this afternoon.

Earlier Friday, the AOFM announced an issuance update saying total gross bond issuance until the end of June (2019-20 fiscal year) would be A$130 billion, out of which A$105.2 billion has been done so far. 

AOFM was not provided an update on JobKeeper prior to the official announcement.

The joint update by the Treasury and ATO said they discovered a reporting error in estimates of the number of employees likely to access the JobKeeper program and accordingly their revised estimate of the cost of JobKeeper is around A$70 billion. This is down from A$130 billion estimated earlier, and factored by AOFM in its update.

AOFM said Treasury Bond issuance via tender will continue at around A$5 billion in most weeks. AOFM said it also plans three tenders of Treasury Indexed Bonds over the remainder of 2019-20, and around A$3 to A$5 billion of T-note issuances each week

Sticking to the borrowing plan would mean the AOFM would end up with excess cash position by the end of June and done advance funding for the next year, assuming there is no unexpected spending between now and then.

--Contact: sophia@centralbankintel.com