Federal government will massively ramp up its borrowing to pay for a swath of stimulus packages launched to cushion the economy from the ravages of the coronavirus, with debt set to balloon over the next year or so.
The Australian Office of Financial Management, which manages the government’s borrowing needs, said on Friday it planned to sell around $5 billion in new bonds every week.
In contrast, the agency has issued $1.2 billion to $1.6 billion per week over the past month.
The AOFM also planned to sell billions in shorter-dated Treasury notes most weeks, to help cover rapidly expanding budget deficits.
The AOFM said it would not release a formal issuance programme before the next government budget update in October.
The budget was postponed from May because the impact of the virus made forecasting untenable in the near term.
Many economists are forecasting the economy could shrink at least 5.0 per cent in the current quarter, from the first quarter, as social distancing and the closure of international tourism wreaks havoc with activity.
The agency said new bond maturities between three to five years and 10 to 12 years were likely to be established by syndication before June 30, which marks the end of the 2019/20 fiscal year.
Syndicated taps into existing lines would be considered. It also intended to establish a new 30-year benchmark bond in the 2020/21 fiscal year if market conditions allowed.
For the week of April 6, the AOFM intended to sell $5 billion in bonds with maturities from 2022 to 2031, and $3 billion of Treasury notes.