Fitch revises outlook on credit rating to positive

Finance Minister Bill English

Fitch Ratings has revised the outlook on New Zealand's credit rating to positive from stable, citing improved government accounts while recognising the country's exposure to China and Australia as a risk.

The AA long term credit rating was affirmed. The improvement in outlook means an upgrade is possible if debt is reduced and if New Zealand can learn to "save anti-cyclically into the boom".

New Zealand is rated Aaa with a stable outlook by Moody's and AA with a stable outlook by Standard and Poor's.

Finance Minister Bill English said the improvement in Fitch's ratings outlook was a vote of confidence in the New Zealand economy and the government's programme.

Fitch said vulnerabilities remained, primarily related to net external debt and a dependence on strong commodity prices.

"New Zealand remains heavily exposed to developments elsewhere, notably in China and Australia," Fitch said.

Fitch notes the government is projecting its first fiscal surplus since 2008 in the 2014/15 budget.

"The fiscal consolidation drive continues to be strong and Fitch believes it is supported across the political spectrum," Fitch said.

"The authorities have a credible plan to lift the fiscal surplus in the years ahead and reduce net core Crown public debt to 20 percent of GDP by FY20."


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