The latest turmoil on global financial markets is bound to make government Budget targets more challenging, although events should be given time to settle down before a conclusion is reached on the effects they have on New Zealand, Finance Minister Bill English says.
The New Zealand government is forecasting a return to budget surplus in the 2014/15 year from a deficit of about NZ$16 billion in 2010/11, while keeping net government debt below 30% of GDP before beginning to pay it off.
Australian Prime Minister Julia Gillard yesterday said her government’s challenge of returning to surplus by 2012/13 would prove more difficult given the sovereign debt crises in Europe and the US, although her government was committed to its surplus track.
The sentiment of staying on track has been echoed in New Zealand, with English and Prime Minister John Key saying the economy was in a good position to handle any fallout from global events, due to policy changes made during the government's three-year term, and as the government was not desperate to borrow on global financial markets, having pre-funded about half of the current year’s borrowing requirements.
Speaking to media in Parliament on Thursday afternoon, English said global markets had been moving around so much that they should be given time to settle down.
“The first half of this year our economy grew faster than expected, in Australia it grew a lot slower than expected, in fact it contracted,” English said.
“Now these events make future prospects look just a bit more risky, so I think we should give it a bit more time to settle down,” he said.
It was “bound to be” more challenging to meet targets.
“We’d be much better off without this sort of turmoil, but I think we’re going to have to get used to outbreaks of market volatility and loss of confidence. This could go on for years,” English said.