Fiscal developments and prospects As regards fiscal aggregates, the general government deficit reached 2.8% of GDP in 2007, compared with 2.6% in 2006, mainly as a result of one-off factors. The consolidated general government debt fell only slightly from 95.3% to 94.5% of GDP and remains the second highest among the EU-27 countries.
The main reason for this is that the monetary policy framework in Australia is seen as credible in ensuring that the inflation rate averages between 2 and 3 per cent over time. But again, the credibility of the framework did not rise out of thin air. Instead, it is the result of nearly two decades of having delivered low and stable inflation.