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Small increase in Overseas Debt

New Zealand's Total Overseas Debt - as at 31 March 1999

At 31 March 1999, New Zealand's total overseas debt was $101.9 billion, an increase of $2.4 billion since 31 March 1998, said Government Statistician Len Cook. This 2.4 per cent rise reflects relative stability after the 25 per cent rise between 31 March 1997 and 31 March 1998. Changes in the value of the New Zealand dollar contributed an estimated $1.8 billion to the rise in New Zealand's total overseas debt at 31 March 1999.

The increase in total overseas debt arose from a $5.0 billion increase in corporate sector overseas debt, to $84.6 billion, and from a $2.6 billion decrease in official sector overseas debt to $17.4 billion at 31 March 1999.

Between 31 March 1998 and 1999 the major changes in types of overseas liabilities were a rise in foreign currency short-term deposits in New Zealand financial institutions, and a continuing fall in foreign holdings of mostly official sector domestically issued securities. This compares with large increases in debt in the form of loans and corporate sector bills and bonds between March 1997 and 1998. These forms of overseas debt have remained little changed at 31 March 1999.

Overseas debt denominated in New Zealand dollars fell between 31 March 1998 and 1999. Conversely, debt denominated in United States dollars continued to rise after being relatively stable at 31 March 1996 and 1997, and now accounts for 34 per cent of total overseas debt. This compares with 28 per cent at 31 March 1998. Overseas debt denominated in New Zealand dollars has fallen from 56 per cent of total overseas debt at 31 March 1998, to 49.8 per cent at 31 March 1999. The proportion of New Zealand's overseas debt denominated in foreign currencies now stands at 50.2 per cent after being at 43 and 45 per cent at March 1997 and 1996 respectively.

New, indicative information has been collected by Statistics New Zealand about the hedging of New Zealand's foreign currency overseas debt. In this context `hedging' refers to the management of risk, for example exchange rate risk, and can involve the use of financial derivative contracts. The results indicate that at 31 March 1998 and 1999, 95 per cent and 97 per cent respectively of New Zealand's foreign currency overseas debt was hedged.

Len Cook Government Statistician 15 June 1999

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