Standard and Poors' decision not to downgrade New Zealand's long-term foreign currency rating was today welcomed by Finance Minister Michael Cullen.

"Obviously we would have preferred it if the agency had also taken New Zealand off negative credit watch. But I accept this was unlikely given New Zealand's very high private sector debt levels and high balance of payments deficit.

"We recognise that for as long as these problems persist, it is essential that the Government run a conservative fiscal policy - especially given the added pressures of the demographic transition," Dr Cullen said.

He was commenting on S and P's stated concern that the coalition Government might not be able to meet its aim of maintaining a surplus across the economic cycle.

Dr Cullen said this year's Budget would go a long way toward eliminating those concerns.

"The Budget round is proceeding satisfactorily at this point and I am very confident we will deliver on our surplus objective," he said.

S and P has affirmed New Zealand's triple "A" rating for long-term local currency issuer credit. It noted that moderate and still falling government debt supported the rating.

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