The Australian government will provide a time-limited voluntary guarantee over state government borrowing, Treasurer Wayne Swan said Wednesday.

The guarantee will be provided for existing and new issuances of securities, but the scheme will not cover issuances denominated in foreign currencies. The scheme will allow states to readily structure their finance requirements to meet their longer term infrastructure plans.

The Commonwealth will charge a fee for the use of the guarantee. Swan said the provision of a guarantee will raise the Commonwealth's contingent liabilities and this would be reflected in the Commonwealth's financial statements.

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