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Australia moves to balance budget

Published by Steve Coleman on May 08, 2012

Australia has taken the plunge and opted to become the first major developed country to stop running deficits since the 2008 recession hit.

The budget announced in Canberra Tuesday plans to both cut defence spending and scale back promised foreign aid to run an AU$1.5 billion surplus in the fiscal year beginning July 1.

Lower tax revenue because of the European debt crisis and damage from record flooding and storms in Australia have been blamed as the main reasons behind a AU$44.4 billion deficit this year. The amount doubled from a year ago.

Australia came through the worldwide financial downturn without a recession. Chinese industry's demand for Australian iron ore and other natural resources helped keep the economy in the black.

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