BUDGET 2016: NZDMO trims $8 bln from bond programme
By Paul McBeth
May 26 (BusinessDesk) - The New Zealand Debt Management Office will cut $8 billion from its issuance programme through to 2020 as the government looks set to reduce debt.
The office is slicing $2 billion from each of the next four years, due to a “lower funding requirement,” the DMO said in a statement. The office will raise $8 billion in the current financial year, falling to $7 billion in each of the subsequent four.
That will see $36 billion of new issuance over the five-year period and $31.4 billion repaid, leaving net bond issuance of $4.6 billion.
Finance Minister Bill English today unveiled his eight budget, and slashed $400 million a year from the 2017 budget new spending allowance to help repay debt.
“We turned an $18.4 billion deficit in 2011 into a $414 million surplus last year, but a tight rein on spending is still required to start repaying debt,” English said in a statement.
Net debt is seen being $62.3 billion, or 24.9 percent of gross domestic product, at June this year, lower than the $65.9 billion, or 26.9 percent of GDP, forecast six months ago. After peaking in 2018, net debt is forecast to fall back to $62.3 billion, or 20.8 percent of GDP, in 2020, down from last December’s forecast of 24 percent of GDP.