Government borrowing $100m a week more than it needs
The government has front-loaded its debt because it is cheaper to borrow money now than it is likely to be in the future, Finance Minister Bill English says.
Treasury figures show the government's borrowing of $380 million a week is about $80 million to $100 million a week more than it has to.
Labour deputy leader Annette King said it was time the government fronted up about why it was borrowing more than it needed to.
If it was because it made economic sense to do that, then why not just say so, Ms King asked.
Finance Minister Bill English said the extra money borrowed, effectively cash held by the Reserve Bank, would enable the government to reduce its borrowing to about $100 million a week from July.
The government had brought forward some of its debt to access a “more favourable” interest rate, he said.
It did not change the total amount of money, $16.7 billion, that needed to be borrowed by the government, he said.
Not only were present interest rates for borrowing lower than they are likely to be in the future, Mr English said borrowing more than it had to in recent months also reduced the risk of not being able to access what it needed to next year.
There was a risk of disruption in European financial markets due to the high level of some countries' indebtedness, which could affect the government's ability to borrow what it needed to in the future, he said.
Mr English said lessons needed to be learned from 2008, when a similar disruption in Europe made it very difficult to borrow money.
However, he admitted that the present high level of borrowing could be putting additional pressure on the exchange rate.
Reducing borrowing from next month should help alleviate that, Mr English said.