Govt’s strong financial management acknowledged
The Government’s strong financial management and plan to future proof the economy with new infrastructure investment has gained further recognition from an international ratings agency.
Credit rating agency Fitch has upgraded one of its main metrics assessing the Government’s books, lifting its foreign currency AA rating outlook to ‘positive’ from ‘stable’.
“This is further recognition that we are managing the books well, and balancing important investments across New Zealand including in health, education and infrastructure,” Finance Minister Grant Robertson said.
“It shows that the economy is in good shape. New Zealand is growing stronger than the countries we compare ourselves to, like Australia. Growth is also being shared more evenly, with low unemployment and the strongest wage growth in a decade.”
Fitch noted the Government’s upcoming announcement of significant new infrastructure investment to boost short-term growth and New Zealand’s medium-term growth potential.
The report forecasts economic growth to rise in 2020 and 2021.
This follows the International Monetary Fund (IMF) earlier this week calling for Governments around the world to increase investment in physical infrastructure to boost growth.
“We’ll soon be announcing details of the new infrastructure investments we’ll be making to future proof the economy, on top of already-record investment,” Grant Robertson said.
“We can do this because of our careful management of the books and record-low interest rates. Fitch said our debt levels are “well below” other countries with similar strong ratings.”
Fitch also said the Government’s fiscal management provided buffers to respond economic shocks and natural disasters. It said external shocks remain a key risk for the economy.
“International headwinds do remain, including the US-China trade war, Brexit and geopolitical uncertainty – particularly in the Middle East. The IMF just this week downgraded its forecasts for global growth again, so we’re making sure our investments will support the economy,” Grant Robertson said.
The Treasury forecasts the Government will run about $12 billion of surpluses over the next four years, and that net debt will remain below the 22.9% of GDP left by National.