{"id":615552,"date":"2026-09-29T17:46:14","date_gmt":"2026-09-29T17:46:14","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/615552\/"},"modified":"2026-09-29T17:46:14","modified_gmt":"2026-09-29T17:46:14","slug":"will-rosier-government-books-catch-the-eye-of-global-ratings-agencies","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/615552\/","title":{"rendered":"Will rosier government books catch the eye of global ratings agencies?"},"content":{"rendered":"

Global credit ratings agencies concerned about the New Zealand economy should find some encouragement in Treasury’s opening of the books<\/a>, according to economists.<\/p>\n

However, they say longer-term challenges remain, and it’s not likely to be until next year that there is any clarity on whether New Zealand might be subject to a future downgrade.<\/p>\n

Treasury is now forecasting a $4 billion surplus for the 2028\/29 financial year<\/a> – significantly higher than the $2.5 billion expected in May, when the books were last opened.<\/p>\n

Over the four-year forecast period, $15 billion less would need to be borrowed.<\/p>\n

Both Moody’s and Fitch Ratings, while retaining their triple-A credit ratings, downgraded their outlook for the New Zealand economy to negative earlier this year.<\/p>\n

A major factor in the outlook downgrades appeared to be concern that higher debt-servicing costs would add pressure to New Zealand’s fiscal outlook.<\/p>\n

A downgrade to a negative outlook can be seen as a warning that, without changes<\/a>, a full ratings downgrade could be on the cards.<\/p>\n

Any future downgrade of New Zealand’s credit rating could be damaging, as it may prompt investors to demand higher interest rates on New Zealand bonds.<\/p>\n

\"Brad<\/p>\n

Infometrics principal economist Brad Olsen.<\/p>\n

RNZ \/ Samuel Rillstone<\/p>\n

Infometrics principal economist Brad Olsen said the ratings agencies would be pleased by the stronger return to surplus.<\/p>\n

“So, I think the ratings agencies will be encouraged by that earlier return to surplus because part of that is also a stronger actual tax take that we’ve already seen. That’s not just forecast; it has come through.”<\/p>\n

The need for less borrowing was also seen as a positive.<\/p>\n

“And so the fact that the government is able to borrow $4 billion less in the current financial year is a great starting point from a ratings agency point of view, because it says that you’re already on that pathway forward. It’s not just anticipated in a couple of years’ time; it is happening.”<\/p>\n

Bagrie Economics economist Cameron Bagrie was more circumspect about how markets and ratings agencies would view the government’s finances, particularly over the longer term.<\/p>\n

“New Zealand’s had a track record. They’ve been pretty good at fiscal consolidation. We’ve done it numerous times, so they’re (rating agencies) believing, I think, more in the track record, the discipline that we saw previously.”<\/p>\n

Bagrie said New Zealand now faced an ageing population and pressure on healthcare and defence spending, and meeting those challenges would require some significant trade-offs.<\/p>\n

\"Cameron<\/p>\n

Bagrie Economics economist Cameron Bagrie.<\/p>\n

RNZ \/ Alexander Robertson<\/p>\n

He said that while spending in those areas could increase in coming years to meet those challenges, the rest of the government budget would need to shrink by 2.9 percent of gross domestic product.<\/p>\n

“You don’t shrink government expenditure by 2.9 percent of GDP without dishing out some cuts to core government services. The issue is: where are those cuts going to be?”<\/p>\n

Treasury Secretary Iain Rennie acknowledged the longer-term challenges facing New Zealand when presenting Treasury’s forecasts, warning that rising costs from superannuation, debt financing and defence would increasingly consume a larger share of government spending.<\/p>\n

Olsen agreed that more attention needed to be paid to the long-term challenges.<\/p>\n

“Like I say, my bigger worry is that, sure, the next couple of years look a lot better in terms of the fiscal position. In the long term, though, those superannuation costs, the fact there’s a lot of defence investment that still needs to go on, and the value of land transport funding being effectively flat, if not down, into the future – all of that says that we are more capacity-constrained heading forward.”<\/p>\n

ANZ’s economics team said the PREFU was not the snooze-fest they had anticipated, and the more optimistic and updated forecasts have resulted in a meaningful downgrade in New Zealand’s borrowing programme.<\/p>\n

However, when it comes to the rating agencies, they said we would have to wait until next year to get clarity on whether a downgrade was likely.<\/p>\n

“Any decision to downgrade is likely to come after Budget 2027. Rating agencies will be looking for a clear and credible post-election commitment to fiscal consolidation – in line with New Zealand’s pre-pandemic track record.”<\/p>\n","protected":false},"excerpt":{"rendered":"Global credit ratings agencies concerned about the New Zealand economy should find some encouragement in Treasury’s opening of…\n","protected":false},"author":2,"featured_media":615553,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[111,43,139,69],"class_list":["post-615552","post","type-post","status-publish","format-standard","has-post-thumbnail","category-new-zealand","tag-new-zealand","tag-news","tag-newzealand","tag-nz"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/615552","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=615552"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/615552\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/615553"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=615552"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=615552"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=615552"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}