Victoria will take “decades” to pay off the debt it will accrue through its big-spending budget, Treasurer Tim Pallas concedes.

But he stressed on Wednesday morning that the strategy is essential to bring the state out of its coronavirus-induced recession and back to prosperity.

Victoria’s debt will triple to $154.8 billion in 2023/24 – about 28.9 per cent of gross state product.

“There’s no doubt this (repaying the debt) will take a considerable period of time,” Mr Pallas told ABC Radio National.

“It will be a long-term strategy that will have to be addressed.

“Yes, it will be decades.”

Ratings agency S&P, which put Victoria’s AAA rating on a negative credit watch amid the second wave, reiterated its view there is “a one-in-two likelihood that we will lower our rating on Victoria”.

“This could occur if we consider the state’s fiscal repair would be delayed beyond our current expectations or if our view is that the state’s financial management has weakened,” it said in a statement.

Moody’s Investors Service Vice President John Manning said Victoria’s second lockdown had “severely eroded” the state’s budget position and “weakened its capacity to pursue timely fiscal repair”.

“While record-low interest rates will enable the state to absorb such a sharp rise in debt, borrowings will remain elevated for an extended period of time and significantly constrain Victoria’s operating profile over time,” he said.

Mr Pallas and Premier Daniel Andrews were selling their budget on Wednesday morning, with the treasurer saying the debt would be “eminently manageable”.

He said the debt as a percentage of Victoria’s revenue base would increase from around 3.4 per cent to 4.4 per cent.

“It’s something being done quite deliberately by the government,” he added.

Mr Andrews noted the Reserve Bank had made it “quite clear” now is the time to borrow, given the low cost.

“We won’t repay the debt we’ve already incurred, we won’t get people back to work unless we get the economy growing and the way to do that is to invest,” the premier told the Nine Network.

Mr Andrews also defended the absence of budget paper No.4, which addresses expenditure on infrastructure projects, saying it is “hard to get a handle” on the impact of the pandemic.

He added the paper would be in the next state budget in May or June.

Community and business groups have praised Victoria’s big-spending budget, which includes an unprecedented $49 billion spend on health, housing, education and transport infrastructure.

The government is hoping to create 200,000 jobs by 2022 and 400,000 by 2025 after more than 250,000 jobs were lost across the state due to the coronavirus pandemic.

Victorian Council of Social Services chief executive Emma King described the budget as an “inequality crusher”.

“It has got the wow factor. It is big. It is bold. It sets us on a clear path for what is a fairer, a kinder and a stronger Victoria,” she said.

The Australian Industry Group, Business Council of Australia, Property Council and Victorian Chamber of Commerce also welcomed measures in the budget.