THE latest review of the Southern Downs Regional Council's financial position has been released, and it's not all bad news.

Last month the Queensland Treasury Corporation undertook a review of the council's finance.

The review followed a tumultuous 2015 for the council, in which the QTC declared the financial rating for the council as weak and gave the region a negative financial outlook.

Fast forward to 2016 and the council appears to have turned a new page, with the financial outlook now "developing".

The council is on track to have an operating surplus of $380,000 at the end of the 2015/16 financial year and debt is also forecast to drop to $27.9million.

The developing outlook is a step in the right direction for the council, but it still means a situation exists that could impact the council's financial sustainability.

A report from the QTC, presented to a meeting of the council yesterday, highlighted the council's "commitment to move towards a more sustainable financial footing."

"SDRC could move towards a moderate rating should its forecast operating result materialise," the report stated.

CEO David Keenan told the council there was some good news in the report.

"The QTC is looking favourably at how we are reducing our operating costs," he said.

"It's important to note that the credit review ratings are based on no additional borrowings by council."

While the review is good news for the council, the QTC's report points to the potential for more rates pain for ratepayers.

According to the report, rates are forecast to increase 31.7% between now and 2020, an average annual increase of 6.34%.

"With 20% of the population 65 or over, the achievement of continued rate increases may prove difficult to achieve," the report stated.

The report noted ratepayers had already been hit with a 22.7% increase in rates and charges during the past four years.