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Budget deficit forecast to be “at the outer limit,” says Key

Budget deficit forecast to be “at the outer limit,” says Key

Dec. 13 (BusinessDesk) – Tomorrow’s half-year update on the government’s books will show a cash deficit well in excess of the already massive $13.3 billion deficit forecast in the Budget in May.

Prime Minister John Key foreshadowed release of a significantly worse fiscal outlook than even recent slumping tax take figures have shown, as the combined impacts of the global recession, Canterbury earthquake and “very cautious” households and businesses come home to roost.

“We have taken our fiscal position to the outer limit of what we regard as acceptable,” Key said in his weekly post-Cabinet press conference. He would not answer questions speculating at a cash deficit over $15 billion, but said the Half Year Fiscal and Economic Update from the Treasury would show “a significant number, not a number we would want to see repeated.”

While a falling income and GST tax take created short term fiscal problems, it was positive for reducing New Zealanders’ overall levels of private foreign debt, said Mr Key, who described the country’s external liabilities as its most important economic issue to address.

However, very low levels of business lending were a concern.

The update would also show the government was serious that there would be no “lolly scramble” before the 2011 election. “We simply can’t afford it,” he said.

Key also outlined his Christmas plans, leaving the country this weekend to attend a family wedding in the U.K. before heading to his holiday home in Hawaii, returning to New Zealand on Jan. 10.

(BusinessDesk) 18:21:13

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