Finance Minister, Nicola Willis, has welcomed rating agency S&P’s vote of confidence in the New Zealand economy.
The agency has affirmed New Zealand’s AA+ foreign currency credit rating with a stable outlook and is forecasting the economy to grow 2.5% in the 12 months to June next year.
“New Zealand is one of just 18 economies to have an AA+, or better rating,” said Ms Willis.
“S&P affirmation of our rating is a vote of confidence in both the economy and the Government’s management of the books.
“S&P says New Zealand’s economic outlook is improving and it expects stronger growth to help reduce the government’s deficit over the next three years.
“Its expectations accord with the Government’s fiscal intentions which are to gradually reduce government spending as a proportion of GDP, return the books to surplus and bend the debt curve down.”
The Minister said that getting the tick of approval from S&P was important because rating agency decisions can move markets.
“Downgrades lead to higher borrowing costs for both governments and people,” she said.
In its review, S&P pays tribute to New Zealand’s monetary policy flexibility, wealthy economy, relatively low net debt, and strong institutions. It says these strengths offset weaknesses associated with external imbalances and fiscal deficits.
It notes that action taken by the current Government to reduce the deficit and revitalise the economy includes: reducing income taxes, streamlining the public service, incentivising foreign investment through the reversal of offshore oil and gas exploration bans, and reforming the local government sector.
“I know many people are still doing it tough, but S&P’s latest report is further evidence that Kiwis can look forward to a growing economy creating more jobs and the government’s books returning to surplus,” Ms Willis said.
