CREDIT agency Fitch Ratings has downgraded Queensland's credit rating, just days after the release of the LNP's first budget.
In another blow to Queensland's finances, the agency announced on Thursday night it had downgraded the long-term foreign and local currency ratings of Queensland and the Queensland Treasury Corporation from AA+ to AA-stable.
In a statement, the agency said Queensland's fiscal position and debt had deteriorated over the last four years and it did not expect a recovery for two years.
"The downgrade also reflects Queensland's increasing vulnerability to non-domestic investors as the absolute amount of QTC's debt has increased which makes QTC more reliant on offshore wholesale funding markets," the statement said.
Fitch acknowledged the State Government's budget measures to bring the finances back to surplus by 2013-2014 but predicted a "slower recovery of the state's finances".
"Uncertainties in the global economy remain a risk to Queensland's revenues which are reliant on federal grant payments, housing and labour market development as well as consumer confidence," it stated.
"The state's revenue growth estimated by Fitch for FY14 is below that forecast by Queensland's government.
Therefore, the agency does not expect Queensland to return to a positive operating balance before FY15."
The agency said that upgrading Queensland's rating in the near future was unlikely and flagged another downgrade if the state was "unable to improve or stabilise its fiscal position over the next two to three years."
Treasurer Tim Nicholls immediately placed the blame on the former Labor Government for the downgrade.
"This news confirms Fitch's earlier indications back in June of this year that Queensland was facing a credit downgrade," Mr Nicholls said.
"Fitch has a more negative view of the global economy and our trading partners due to their European base and experience.
"Fitch also base their ratings more so on past performance and not future performance, which makes them different from S&P and Moody's."
Mr Nicholls said Fitch's statement made clear reference to the weak fiscal management of the Labor Party over the last three years.
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