Summarised by Centrist
S&P Global Ratings has affirmed New Zealand's AA+ foreign-currency and AAA local-currency sovereign ratings, both with stable outlooks.
The agency expects stronger growth, but it also forecasts the general-government deficit to widen to 5.1% of GDP in the 2027 financial year before improving to below 4% in 2028.
S&P expects net general-government debt to stabilise at roughly 38% to 39% of GDP over the next three years. It identifies New Zealand's wealthy economy, strong institutions, relatively low net debt and flexible monetary policy as strengths offsetting fiscal deficits and external imbalances.
Finance Minister Nicola Willis says the result is a vote of confidence in the Government's plan to reduce spending as a share of the economy, return the books to surplus and slow the growth of debt. S&P forecasts the economy to grow 2.5% in the 12 months to June 2027.
The affirmation matters because a downgrade can lift the cost of borrowing for the Crown and flow into wider interest rates. But it is not an all-clear on the public finances.
The Treasury's ratings table shows S&P is the most comfortable of the three major agencies on outlook: Moody's holds a negative outlook on New Zealand's Aaa rating, while Fitch has a negative outlook on its AA+ rating.
Read more at the Beehive, New Zealand Debt Management and Investing.com
Re-published from the Centrist with permission
