Fitch Ratings has affirmed Australia's triple-A rating, but warned that scrapping the Medicare levy hike while keeping committed to the National Disability Insurance Scheme (NDIS) poses a challenge.

The global ratings agency said the Turnbull government's decision to junk the proposed 0.5% increase in Medicare levy, while committing to fully funding the NDIS “poses a challenge” toward achieving its forecast surplus in 2020/21.

While confirming Australia's triple-A credit rating on Thursday, Fitch said the projected surplus in mid-2021 is highly sensitive to economic outcomes.

According to Fitch, “the budgetary impact of the newly proposed income tax cut measures remains to be seen as details will be released in the (2018/19) budget," news.com.au reported. "Political differences between the House and the Senate have limited the government's ability to push through significant budget-related legislation, and pose an additional downside risk."

The budget will be released by Treasurer Scott Morrison on Tuesday, the report said.