Record debt in Victoria’s big-spending budget will take decades to pay off but is “eminently manageable”, according to Treasurer Tim Pallas.

Mr Pallas and Premier Daniel Andrews spent Wednesday morning spruiking the budget, which aims to spend the state out of its coronavirus-induced recession and create 400,000 jobs by 2025.

The budget, which includes an unprecedented $49 billion spend on health, housing, education and transport infrastructure, will triple Victoria’s debt to $154.8 billion in 2023/24 – about 28.9 per cent of gross state product.

The treasurer said he has no doubt repaying the debt will “take a considerable period of time”.

“It will be a long-term strategy that will have to be addressed,” he told ABC Radio National on Wednesday.

“Yes, it will be decades.”

Ratings agency S&P said there is “a one-in-two likelihood” it will lower the state’s treasured AAA credit rating. It already put the state on credit watch in August as it was battling a second wave of coronavirus.

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

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

The premier said the government was following the advice of Reserve Bank Governor Philip Lowe to borrow, given low interest rates.

“This is a budget for its times, this is a one-in-100-year event and the only credible, the only feasible way to create jobs, opportunity, that sense of spark and dynamism back into the Victorian economy is to invest,” Mr Andrews told reporters.

“Yes, there are borrowings and they will need to be serviced, and they will need to be repaid over a lengthy period of time. But just as those projects are important now, they’re important for our kids and our grandkids as well.”

He said the government’s debt was much smaller than the one racked up by the federal government in its budget.

“I’m not reporting to you a trillion dollars worth of debt, which is where the federal government finds itself,” he said.

“We are investing now, appropriately to get this place going again.”

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

The opposition has claimed the failure to release Budget Paper No. 4 effectively handed a “blank cheque” of taxpayer dollars to the government.