By finance reporter Elysse Morgan
Updated
One of the world's major ratings agencies, Standard & Poor's, believes Australia will record a budget deficit of $20-25 billion this year.
The agency has slashed its earlier estimate of a $1 billion surplus.
S&P's senior director of sovereign ratings Tan Kim Eng says the cut is mainly due to global economic problems.
"Firstly the export sector is not doing as well as initially expected, commodities exports have not been as strong, on the other hand expenditures are rising," he said.
The agency has affirmed the country's sovereign rating at the highest possible AAA, one of only seven countries in the world to be rated that highly.
However S&P says this could come into question if there is no pick up in the global economy and Australia's financial system is affected.
The agency's deficit estimate matches the Federal Opposition's, which Treasurer Wayne Swan dismissed earlier today.
Mr Tan says only a large economic rebound will bring a surplus this year.
"If the economy were to rebound very strongly in the second half of this year, then that's definitely achievable, but it would have to be a very strong rebound, something that is, in our view at the moment, not very likely," he said.
Topics: business-economics-and-finance, economic-trends, budget, australia
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