A major global ratings agency has called into question the scale of Victoria's mounting debt, sparking fears of a credit downgrade.
The latest report into Victoria from ratings agency Moody's forecasts net direct and indirect debt to climb to $226.2 billion by mid-2027.
That would reflect an 85 per cent increase in outstanding debt from $122 billion in 2022.
"The state has large debt funding requirements over the next four years which combined with rising interest rates ... will test institutional capacity as the state targets fiscal repair," the report said.
The Victorian budget in May forecast net debt to hit $171.4 billion by mid-2027 and unveiled a $31.5 billion COVID-19 debt levy on big business and property investors.
The annual cost of servicing the debt was expected to rise to just shy of $8 billion within four years, equating to more than $21 million a day.
Shadow Treasurer Brad Rowswell expressed concerns the interest bill could rise higher.
"When rating agencies send these signals and deliver these figures it could mean a potential further downgrade," he told reporters at parliament on Tuesday.
Moody's downgraded Victoria's credit rating from AA1 to AA2 in 2022 after stripping the state of its AAA status in February 2021.
But the ratings agency has maintained Victoria's economic outlook as "stable" for more than a year, after relegating it to "negative" in 2021.
It said the state's debt burden was unlikely to stabilise by mid-2028 despite the underlying strength of the Victorian and broader Australian economy.
"Victoria's stand-alone credit profile has weakened in recent years and will continue to do so as sustained infrastructure spending continues to drive debt higher," its July report said.
Treasurer Tim Pallas reaffirmed the state's net debt over the forward estimates worked out to be $171.4 billion under standard accounting principles and rubbished an accompanying report.
"I almost choked on my Weeties - they pulled out the special sauce for this one," he said.
He said the Moody's figure effectively represented gross debt, which doesn't factor in trading revenue from public entities such as water and insurance agencies.
Mr Pallas expressed confidence a credit ratings downgrade wasn't in the offing.
"If you look at the commentary from both Moody's and Standard & Poor's, I think it's pretty clear that the general perception is the state still has headroom with regard to its existing credit rating," he said.
"But look we have to work with this, there's no question about that."
