Article by Adrian Lowe and Josh Zimmerman courtesy of the West Australian.
The State and Federal Government’s coffers are poised for a major lift if the International Monetary Fund’s latest projections for the iron ore price materialise, with forecasts it will not dip below $US100/t before 2028.
In its latest country report for Australia, released on Friday, the IMF projects iron ore prices will slide from $US161/t to $US105/t by 2028 — generating a further royalties boom for State and Federal Budgets given, if realised, prices such as that are far above their conservative estimates for the price of the steelmaking input.
On latest updates, the Federal Budget is within reach of its second surplus in as many years thanks to an increasing tax take and the strong iron ore price, which on Friday was $US136.08/t, while the WA Budget last month was reported to be in surplus to the tune of $3.7 billion.
WA Treasurer Rita Saffioti said any price increases in commodities would often help insulate the Budget from falls in others, citing collapses in the lithium and nickel prices.
“We’ll continue to look at our forecasting, but in relation to commodities, they are volatile, and the practice of conservative budgeting means that we can continue to run our budget in a conservative manner,” she said. “That also means that we can control debt and deliver surpluses.”
WA Treasury last month revised its forecast iron ore price for 2023-24 to $US104.20/t from $US74.10