Ratings agency Moody's has revised its outlook on Tasmania's AA1 credit rating to negative.

The move is not a downgrade, but the rating is less stable than a regular AA rating.

The agency says the negative outlook is due to "ongoing deterioration" in Tasmania's financial performance, which it expects will continue as spending outpaces revenue raising.

Earlier this month, the State Government abandoned plans to bring the budget back to surplus by 2017, outlining a $450 million hit in its budget update.

Economist Saul Eslake says it was inevitable the state's rating would be reviewed.

"Of course in addition to the deteriorating position of the so-called general budget, there's also likely to be a deterioration in the financial position of the State's Government Business Enterprises, which in Tasmania, is where most of the debt resides."