Ratings agencies concerned by Tas budget

Ratings agencies have noted Tasmania's strengthening economy as the state government handed down its $5.4 billion 2015/16 budget, forecasting a return to surplus three years sooner than previously expected.

However there are doubts the state will be able to adhere to the spending constraints outlined by the Liberal administration.

Treasurer Peter Gutwein on Thursday revealed Tasmania's fiscal outlook, which forecasts a $59 million deficit for the coming financial year, followed by a three-year cumulative surplus of $310 million.

Moody's Investors Service describes as robust the state's revenue growth - which comes largely from increased GST payments - that "is projected to spur significant improvements in its financial performance both this fiscal year and over the medium term".

But despite big-ticket spending, including $1.8 billion on infrastructure, $1.6 billion on health and $1.4 billion on education, Moody's questioned the outlays.

"We think the state's ability to constrain current expenditure growth at these very low levels over a four-year period will be challenging," the agency said in a statement.

Shortly after the release of the budget, both Moody's and Standard and Poor's reiterated Tasmania's credit rating of Aa1 and AA+, respectively.

But the latter agency also voiced concerns.

"The state's fiscal projections incorporate plans to maintain wage and non-wage expense growth at a very low rate.

"While we believe the government is committed to achieving these outcomes, we expect it to find this somewhat challenging."

Since the Liberal government came to power in March 2014, business confidence has risen to the highest in the Australia, while retail trade has its strongest year and building approvals have soared, Mr Gutwein said.