Moody's gives nod for Budget commitment
Moody's Investors Service has reaffirmed New Zealand's AAA credit rating.
Moody's Investors Service has reaffirmed New Zealand's AAA credit rating.
"Although the economy has grown somewhat less than earlier forecasts, directly affecting revenue growth, the government remains committed to returning to budget balance by 2015-16 and took extra measures to achieve this target," it said.
"New Zealand’s government finances have been affected by a number of one-time shocks over the past few years, and we view the commitment to achieve a balanced budget as credit positive, particularly for this country, which has low government debt compared with other highly rated sovereigns.
"Nonetheless, the government’s fiscal consolidation plans remain subject to considerable risk.
"The government forecasts gross government debt to peak at 38.5% of GDP at the end of the current fiscal year before it begins to decline.
"The OECD estimates a broader measure of general government debt (including some entities not included in the 'core Crown' budget) will approach 50%, but even at this level New Zealand’s government debt would only be approaching the median for Aaa-rated sovereigns.
"Although the 38.5% peak level of debt is somewhat higher than the government forecast before last November’s elections, the higher ratio is due to downward GDP revisions, since the estimated deficit in the 2012 fiscal year is now lower compared with the pre-election forecast," Moody's said.
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Moody's gives nod for Budget commitment
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