Rating agency Standard & Poor's says today's Budget will have no immediate impact on New Zealand's rating.

"The Budget is still supportive of the Government's overall credit quality," credit analyst Kyran Curry said today.

"We see it as an incremental step towards stabilising its fiscal position as conditions allow after four years of deficits.'

This was crucially important in New Zealand's case given the weaknesses on the external side and with the risks to the growth outlook for this country's major trading partners.

'It is important to stabilise its fiscal situation as soon as it can but we don't think in isolation it should be doing that while its economy may weaken."

S&P had learned in Europe that governments that had been "hell-bent on stabilising their fiscal positions have actually harmed their own economy".

"The fiscal outlook faces a number of challenges, including renewed uncertainties surrounding trading
partner growth and the outlook for agricultural commodity prices, which may further pressure revenues
and hamper the government's efforts to stabilise its fiscal position," he said.

"The stable outlook reflects our current expectation that the Government will continue to consolidate public finances against the risks associated with the country's high private-sector external debt.

"The strength in Government finances and the sound credit profile of New Zealand's major banks, which account for the majority of the country's external debt, are important mitigating factors to these risks," Curry said.

He said S&P could lower its ratings if New Zealand's external position continued to deteriorate as its economy strengthened.

"Rising public savings will be an important component to keep the country's current account deficit in check. On the other hand, upward pressure on the ratings could emerge if sustained current account surpluses, led by stronger export performance and higher public savings, markedly reduced external debt."

- © Fairfax NZ News