NZ credit ratings, stable outlook affirmed by S&P
By Tina Morrison
Aug. 26 (BusinessDesk) - New Zealand's credit ratings were affirmed by Standard & Poor's, citing the nation's fiscal and monetary policy flexibility, economic resilience, public policy stability and sound financial sector.
S&P kept its AA foreign currency long-term rating and AA+ local currency long-term rating, while the short-term ratings were affirmed at A-1+, it said in a statement. The agency also retained its stable outlook on New Zealand, in contrast to Fitch Ratings which last month raised its outlook to positive from stable. Moody's also has a stable outlook.
"New Zealand's fiscal performance is gradually improving, following the negative impacts of the global recession and the 2010-2011 Canterbury earthquakes," S&P said. "We expect the central government - regardless of which party is in power - to continue to improve budget performance over coming years."
The government's cash deficit improved to 2.5 percent of gross domestic product in 2014, from a peak of 7 percent in 2011, S&P said. Net government debt is expected to peak at about 24 percent of GDP in 2016, before gradually declining with the debt-servicing burden to remain moderate, the agency said.
Factors moderating the country's strength include very high external imbalances, along with high household and agriculture sector debt and dependence on commodity income, S&P said. The agency cited New Zealand's strong and growing links with China's economy as a risk to its growth outlook and credit quality.