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Surplus Brings New Zealand Closer To 'AAA' Rating: Fitch

by Mary Swire, Tax-News.com, Hong Kong

19 October 2015


Fitch Ratings has welcomed the unexpected budget surplus posted by New Zealand for the fiscal year ending June 30, 2015 (FY15).

New Zealand reported that the gap between revenues and expenditure – known as the operating balance before gains and losses (OBEGAL) deficit in New Zealand – came to a surplus of NZD414m (USD282m). This was the first OBEGAL surplus since 2008. Previously, in the May Budget, the Government had anticipated a deficit of NZD684m.

Tax revenues were NZD559m higher than expected, while expenditures were NZD495m lower.

Fitch said that the healthy surplus had contributed to the Positive Outlook for New Zealand's "AA" rating. However, the agency predicts that Government spending will be higher in FY16.

"Nonetheless, the surprise OBEGAL surplus reinforces New Zealand's Positive Outlook, and underscores Fitch's expectation for deficit reduction to continue and public debt to decline after 2017," Fitch Ratings said.

New Zealand's Finance Minister, Bill English, said recently that while the country achieved a budget surplus last year "a weaker global economy and lower inflation outlook means Crown revenue is likely to grow slower than previously expected."

TAGS: Finance | economics | fiscal policy | budget | International Monetary Fund (IMF) | New Zealand | inflation | Tax

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