#1SOUTH AUSTRALIAN FISCAL & ECONOMIC UPDATE OCTOBER 2023 SAFA South Australian Government Financing Authority SOUTH AUSTRALIA SOUTH Government of STRA South Australia#22023-24 BUDGET - KEY METRICS KEY BUDGET INDICATORS 2022-23 2023-24 2024-25 2025-26 2026-27 Estimated Budget Estimate Estimate Estimate Result General government net operating balance ($m) -249 250 512 552 639 General government net lending ($m) -1 485 -1 846 -1 611 -2 569 -2734 General government net debt ($m) 17 859 20 293 22 488 25 433 28 579 Non-financial public sector net debt ($m) 26 043 29 074 31 537 34 563 37 563 Net debt to revenue ratio (NFPS) 100.5% 104.4% 110.6% 117.4% 121.6% SAFA South Australian Government Financing Authority SOUTH AUSTRALIA SOUTH AUST IT RAL Government of South Australia#3THE ECONOMY • • Strong growth in GSP and employment in 2022-23 SA winter crop production for 2022-23 a new record high Construction activity is performing well, with a strong pipeline to support near-term activity Outlook for 2023-24 more subdued. Federal government anticipates slowing growth in 2023-24 due to higher interest rates and prices Employment growth to slow moderately following strong growth in 2022-23 KEY ECONOMIC INDICATORS UNDERLYING THE BUDGET AND FORWARD ESTIMATES - SOUTH AUSTRALIA 2022-23 Estimate 2023-24 Forecast 2024-25 Projection 2025-26 Projection 2026-27 Projection Gross State Product - real growth (%) 31 1 134 2 2 State Final Demand - real growth (%) 212 14 1 3/4 2 2 Employment - growth (%) 3 1 3/4 1 1 CPI (%) 734 334 314 234 2½ SAFA South Australian Government Financing Authority SOUTH AUSTRALIA SOUTH AUST IT RAL Government of South Australia#4ECONOMIC STATEMENT SMART ECONOMY SUSTAINABLE ECONOMY INCLUSIVE ECONOMY • An ambitious and capable state that embraces technology and drives. innovation Connectivity and a smart workforce are at the heart of a smart economy Our renewable energy capacity and hydrogen production provide a new opportunity - a green-reindustrialisation of our economy Our credentials attract businesses and investors looking to demonstrate their commitment to sustainability Recognises that inequality constrains economic growth, and that social inclusion and economic success go hand in hand SAFA South Australian Government Financing Authority SOUTH AUSTRALIA SOUTH AUST IT RAL Government of South Australia#5KEY INITIATIVES ENVIRONMENTAL SOCIAL GOVERNANCE South Australian Government Climate Change Actions • • • hydrogen power station and export terminal SA Virtual Power Plant zero-emission public transport fleet • Learn and Thrive: Our Strategy for Public Education SA Skills Plan (due early 2024) New Women's and Children's Hospital First Nations Voice to Parliament SAFA South Australian Government Financing Authority SOUTH AUSTRALIA SOUTH AUST IT RAL Government of South Australia#6SOUTH AUSTRALIA'S ESG STRATEGY Strategic whole-of-state approach to ESG and management of climate-related risk ACTIONS • • Declaration of a Climate Emergency by the South Australian Parliament and associated Climate Change Actions, including Net Zero emissions plan and strengthened climate change legislation Demonstrable alignment of State's operational and capital expenditure to global Sustainable Development Goals and published in the Budget Development of a Sustainability Bond Issuance Framework that sits over SAFA's debt program for launch in the near future that demonstrates state debt alignment with market-accepted sustainable outcomes and principles (i.e. ICMA / CBI), in the context of the State's Economic Statement and climate change response SAFA South Australian Government Financing Authority SOUTH AUSTRALIA SOUTH AUST IT RAL Government of South Australia#7SAFA 2023-24 FUNDING UPDATE OCTOBER 2023 SAFA South Australian Government Financing Authority SOUTH Government of South Australia SOUTH AUSTRA AUSTRALIA#82022-23 FUNDING OUTCOME Original $6.6 billion budget requirement Revised to $4.8 billion at December 2022 MYBR, final estimate $5.4 billion • Pre-funding of $0.5 billion after 2023-24 final estimate adjustment . Issued $6.475 billion face value for a cash amount of $5.91 billion • • • Issued a new AONIA June 2027 and new May 2038 fixed rate Select Line Increased maximum outstanding in any line to $4 billion (May 2028 line) Completed refinancing of the November 2023 maturity Conducted buyback of August 2024 line for refinancing purposes Held approximately $3 billion in short term funding programs SAFA South Australian Government Financing Authority SOUTH AUSTRALIA SOUTH AUST IT RAL Government of South Australia#9FUNDING PROGRAM Budget MYBR Actual Estimate Amounts in $b 2022-23 2022-23 2022-23 2023-24 Gross funding task 7.7 7.6 8.5 8.2 Long term funding 6.6 4.8 5.4 5.2 SA public sector 2.6 1.5 1.9 3.0 2023-24 Prefunding 2022-23 Revised term 5.4 Pre-funding of SA public sector -0.2 -0.9 -0.9 -0.5 2022-23 Actual 5.9 Additional prefunding 0.5 Prefunding 0.5 Funding future term maturities 4.2 4.2 4.2 2.7 Short term funding 2.8 2.8 3.0 3.0 Term maturities -3.6 -3.6 -3.6 -1.5 SAFA South Australian Government Financing Authority SOUTH AUSTRALIA SOUTH AUST IT RAL Government of South Australia#10FORWARD FUNDING ESTIMATES Non-Financial Public Sector ($b) Estimate Budget Estimate Estimate Estimate 2022-23 2023-24 2024-25 2025-26 2026-27 2022-23 Budget 27.3 30.2 32.0 33.9 n/a 2022-23 MYBR 25.5 28.8 31.1 33.5 n/a 2023-24 Budget 26.0 29.1 31.5 34.6 37.6 Change from MYBR -0.5 -0.2 -0.5 -1.1 n/a Long term funding SA public sector SA public sector less prefunding Funding future term maturities Term maturities Term debt outstanding 5.2 5.6 7.0 7.4 3.0 2.5 3.0 3.0 2.5 2.7 3.2 4.0 4.4 -1.5 -4.9 0.0 -6.0 30.2 34.4 35.3 42.3 43.8 SAFA South Australian Government Financing Authority SOUTH AUSTRALIA SOUTH AUST IT RAL Government of South Australia#112023-24 FUNDING STRATEGY Target $4-4.5 billion in even year Fixed Rate Select Lines, $3-3.5 billion in odd year lines via a combination of fixed and floating rate lines Will not issue into 2023, 2024, 2025, 2026 or 2027 fixed rate lines, or 2025 floating rate line Maintain $3-3.5 billion in short term funding programs Refinance the April 2025 Fixed Rate and June 2025 Floating Rate lines in accordance with liquidity policy Consider opportunities to issue longer dated non-benchmark lines out to 30 years Issue a new May 2029 fixed rate line • Tap the May 2038 line COMPLETED Refinancing of the August 2024 Fixed Rate Select Line Tapped the 2032 and 2034 Fixed Rate Select Lines Issued a new June 2029 Floating Rate line Have issued $2.06 billion face value / $1.80 billion cash value of debt FY to date (35%) SAFA South Australian Government Financing Authority SOUTH AUSTRALIA SOUTH AUST IT RAL Government of South Australia#124.5 Short Term Nov-23 SAFA South Australian Government Financing Authority SOUTH AUSTRALIA 30-June 2023 Final 130-June-2024 Projected AUST IT RAL SOUTH Aug-24 Apr-25 June 25 FRN Jul-26 June 27 FRN Sep-27 May-28 May-29 June 29 FRN May-30 May-32 May-34 May-36 May-38 May-40 ווייןיןוין /// 2023-24 PROJECTED TERM DEBT Government of South Australia#13SAFA CONTACT DETAILS Andrew Kennedy - Director, Treasury Services [email protected] +61 8 8429 0416 (w) / +61 401 123 943 (m) www.safa.sa.gov.au/treasury-and-client-lending Peter King Chief Risk Officer - [email protected] +61 419 708 072 (m) Anthony Coates - Chief Executive Officer [email protected] +61 401 794 794 (m) SCAN TO DOWNLOAD PRESENTATION SAFA South Australian Government Financing Authority SOUTH AUSTRALIA SOUTH AUST IT RAL Government of South Australia