Fitch Ratings on Wednesday affirmed Victoria's long-term issuer default ratings at "AA+" with a stable outlook.
The affirmation reflects the state's large and resilient economy, which supports a strong revenue outlook and underpins the rating agency's expectation of gradual growth in operating surpluses over the medium term.
However, Fitch noted that Victoria still faces fiscal challenges, especially due to high demand for services and a large capital spending program that continue to drive debt growth, with macroeconomic risks also constraining growth prospects.
"We expect Victoria's proactive budgetary measures and economic strength to gradually reduce leverage - reflected in the stable outlook - in line with the state's goals to control spending and slow debt growth," Fitch said.