Chalmers says Budget 'hostage' to Middle East conflict

Treasurer Jim Chalmers said the government is working to "strike the right balance" in the May Federal Budget despite pressures to the economy from the ongoing conflict in the Middle East.

Speaking in Washington DC, Chalmers said the Budget has been under constant review as the conflict rages on but said he is still prepared to present it on May 12.

Chalmers has been in the US taking part in discussions with US Treasury Secretary Scott Bessent and other G20 nations.

"We will do our best to take into consideration all of the developments around the world and especially in the Middle East," Chalmers said.

"These developments are having a huge impact on our economy already and we expect that impact to continue. And so these discussions have helped us calibrate the Budget to the international conditions that make sure that we're striking all the right balances between near-term pressures, longer term obligations, resilience and reform.

"And I'm confident we can strike the right balance. But we are hostage to developments in the Middle East in particular, and that's why this engagement has been so important."

Chalmers also welcomed the news of progress and dialogue between the US and Iran, which he said will hopefully lead to the end of the war.

"From an economic point of view the end of the war can't come soon enough. The consequences of this conflict on the other side of the world are already very serious for Australians, and they risk becoming severe," he said.

"We welcome the news that there will be more dialogue and, ideally, more progress towards an enduring ceasefire, the end of the war and the opening of the Strait of Hormuz in an ongoing way."

Chalmers used strong language during the update from the discussions he was involved in, saying the global economy "desperately needs" to see free passage through the Strait.

"This is a dangerous moment in the global economy. As I said, the costs and consequences of this war are already serious. They do risk becoming severe," he said.

"Australians haven't chosen the circumstances of this war, but they are paying a very hefty price for it at the petrol bowser and beyond."