A deficit “at the outer edge of what we're comfortable with” will be unveiled tomorrow, Prime Minister John Key said this afternoon.While parrying questions about what the deficit is likely to be, Mr Key said the figures to be released in tomo
A deficit “at the outer edge of what we’re comfortable with” will be unveiled tomorrow, Prime Minister John Key said this afternoon.
While parrying questions about what the deficit is likely to be, Mr Key said the figures to be released in tomorrow’s Half Yearly Economic and Fiscal Update will be worse than those in the budget in May.
Asked whether this meant the government is borrowing more than the oft-mentioned $250 million a week, Mr Key said “Yeah but if I gave you that number you would just multiply it by 52…you’ll have to wait until tomorrow.”
Economists are currently talking of a cash deficit above $14 billion and perhaps as high as $16 billion.
Mr Key said the financial year to June 2011 was always expected to be the worst year of deficit.
Running the deficit at this level had been necessary to “take the rough edges off the recession” and it has broadly worked, he said.
“I think we’ve actually got through the recession pretty well. It’s not great growth, but we’ve had, four, no, five, quarters of growth in a row.”
The government’s next move in the New Year would be to put together policies for the 2011 budget and election.
“This is about a long term programme.”
Whatever the figure to be revealed tomorrow, it is not likely to surprise the ratings agencies, he said.
Standard and Poors caught the government – and the Reserve Bank - by surprise last month with an unexpected move to put New Zealand’s AA++ rating on negative watch.
Mr Key said the Treasury is “always in touch” with the ratings agencies.
