NZ HYEFU: Give and take - ANZ
Analysts at ANZ explain that on the expected lines, the Treasury’s Half-Year Update of New Zealand showed that the Government’s books are expected to remain in good shape over the next five years.
“A stronger starting point has not convinced the Government that now is a good time to increase spending.”
“The Minister of Finance continues to walk the path of fiscal prudence. While there appears to be a little wiggle room based on the net debt forecasts, he reiterated that given global uncertainties, now isn’t a good time to push the limits of the debt constraint.”
“Accordingly, net core Crown debt is forecast to moderate from 20.9% of GDP in the year to June 2019, to 19.0% in 2021/22.”
“Debt Management’s bond guidance was unchanged from the Budget Update, with $6bn pencilled in for the additional forecast year (2022/23). There is little in here that should engender a market reaction.”
“Once again, the Treasury’s economic outlook underpinning the fiscal forecasts is more optimistic than our own, but this has been downgraded. On our growth numbers the books would still improve over the years ahead, but it would take a little longer to meet the debt target, and/or require cost savings further down the track.”
“The Government’s Budget Policy Statement included five new well-being priorities that will guide spending decisions in the 2019 Budget. There were no changes to the five Budget Responsibility Rules.”