Standard and Poor’s is the latest independent credit rating agency to endorse the Government’s economic management in the face of a deteriorating global economy.
S&P affirmed New Zealand’s long term local currency rating at AAA and foreign currency rating at AA+ with a stable outlook. It follows Fitch affirming New Zealand’s AA+ rating with a stable outlook and Moody’s annual credit analysis affirming a stable outlook on New Zealand’s local currency and foreign currency ratings at Aaa.
“The Government’s balanced and responsible economic management has been recognised once again and shows that the major credit ratings agencies continue to have confidence in New Zealand’s resilience in an uncertain global environment,” said Finance Minister, Grant Robertson.
“S&P praised New Zealand’s excellent institutional settings, economic wealth and modest level of government debt, noting that the Government’s management in response to the COVID-19 pandemic meant the country recovered faster than most of its peers.
“The ratings agency acknowledged New Zealand’s very strong institutions and governance as key credit factors underpinning the country’s rating and the Government’s focus on sustainable public finances and economic growth. It said New Zealand had been placed at or near the top of many international surveys of good governance.
“The Government has continued to take action to consolidate spending, which S&P expects to drive a narrowing in the deficit in coming years. Our ongoing savings and efficiency exercise has found almost $4 billion in savings over the forecast period to help ease inflation pressures and make sure we meet our fiscal rules of returning to surplus over the forecast period and keep debt levels under the limit of 30 percent of GDP.
“This is important given that the Government accounts for the 11 months to the end of May indicated a $2.2 billion reduction in core tax revenue from what was forecast in May’s budget.”
S&P said New Zealand’s public debt levels compare favourably to that of most highly rated peers.
The credit rating also reflected S&P’s long-standing views on the issue of external imbalances and high private sector debt.
“There are still challenges ahead for the New Zealand economy however we are well placed to handle them. We are committed to our plan to meet our balanced and responsible fiscal goals, make our economy stronger and more resilient and support New Zealanders with targeted cost of living relief that doesn’t add to inflation pressures,” Mr Robertson said.