Budget won't affect NZ's rating

04:03, May 15 2014

Credit rating agency Standard & Poor's said the Government's Budget would not affect its assessment of New Zealand's financial strength.

S&P rates Crown debt at AA with a stable outlook.

This year's Budget confirmed a small surplus of $372 million next year with growing surpluses to come.

The Treasury's budget forecasts were in line with its expectations, said S&P.

"The Government remains on track to meeting its target of an operating surplus in fiscal 2015.

"This should further improve the Government's fiscal balance, which we expect to be in a broadly balanced position by fiscal 2017."

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Net government debt should peak at less than 30 per cent of gross domestic product, S&P said.

"Although a general election is due in September ... we believe the current fiscal strategy would be broadly unaffected by any change in government, due to New Zealand's strong political and community consensus for prudent fiscal management."

Singapore-based TD Securities, a subsidiary of Canada's Toronto Dominion bank, said New Zealand's budget position merited a more optimistic rating outlook.

"In contrast to the fiscal woes and teeth-gnashing across the Tasman, New Zealand's 2014/15 budget contains nothing but good news, with a fiscal position looking at its strongest in years," said TD's head of Asia-Pacific Research, Annette Beacher.

"We believe there is a strong case for an outlook upgrade to AA/positive."

The debt and deficit figures supported a "structurally higher" kiwi dollar, she said.

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