Increase in Overseas Debt

Increase in Overseas Debt At 31 March 2000

New Zealand's overseas debt was $109 billion, an increase of $6.7 billion, or 6.5 per cent, since 31 March 1999, Deputy Government Statistician, Ian Ewing announced today. The latest rise compares with a 3.1 per cent increase between 31 March 1998 and 31 March 1999.

The increase in total overseas debt arose from an increase in corporate sector borrowing and a falling New Zealand dollar. Changes in the value of the New Zealand dollar contributed an estimated $3.8 billion to the rise in New Zealand's total overseas debt at 31 March 2000.

>From 31 March 1999 to 31 March 2000, corporate sector overseas debt rose $7.7 billion to $92.7 billion. While changes in corporate sector structures and activities affected the level of non-bank corporate sector debt, significant net new borrowings have been undertaken by the banking sector. Most of the net new borrowing has been undertaken in the form of deposits and loans, is predominantly short-term, and the most important borrowing currencies have been United States dollars and Japanese Yen. An effect of this has been a rise in the relative importance of the United States dollar as a borrowing currency, to comprise 35 per cent of total overseas debt at 31 March 2000, compared with 32 per cent at 31 March 1999. A further effect has been an increase in the proportion of current debt (ie debt with a term of 12 months or less) to total debt to 43 per cent at 31 March 2000, from 35 per cent at 31 March 1999.

While corporate sector overseas debt continues to rise, official sector overseas debt is falling. Official sector overseas debt at 31 March 2000 was $16.4 billion, comprising 15 per cent of total overseas debt. Between 31 March 1999 and 31 March 2000 official sector overseas debt denominated in New Zealand dollars fell by $1.5 billion. This contributed significantly to the fall in the proportion of New Zealand dollar denominated overseas debt to total debt to 43 per cent at 31 March 2000, compared to 47 per cent at 31 March 1999.

New Zealand's overseas debt denominated in foreign currencies continues to be hedged at levels approaching 100 per cent. At 31 March 2000, 97 per cent of New Zealand's overseas debt denominated in foreign currencies was hedged in some way. This is the same result as at March 1999, and compares with the March 1998 result of 95 per cent.

The ratio of total overseas debt to the total value of exports of goods and services now stands at 329.4 per cent, down from 336.5 per cent at 31 March 1999.

Ian Ewing
Deputy Government Statistician
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