If last year’s NZ Budget was the “wellbeing budget,” I guess the 2020 budget should be coined something like the “Covid response & recovery budget.”
The key highlight is net debt is forecast to surge to 53.6% of GDP by 2023 – big increase from the previous 20% target,
but is indicative of the massive amount of damage to the economy from the covid-19 virus and subsequent response.
The key budgetary points are:2020 Operating surplus before gains, losses (OBEGAL) NZ$-28.293billion, (half year economic fiscal update (HYEFU)
NZ$-0.943 billion)2020/21 OBEGAL deficit NZ$-29.599 billion (HYEFU NZ$+0.057 bln)2021/22 OBEGAL deficit NZ$-27.199 billion (HYEFU NZ$+1.752 bln)2020 Net Debt 30.2% of GBP (HYEFU 19.6%)2020 Cash Balance NZ$-32.031 billion (HYEFU NZ$5.154 bln)2020/21 Cash Balance NZ$-43.313 billion (HYEFU NZ$7.973 bln)Economy to contract by 4.6% in 2020 (ie -4.6% GDP)2022/23 OBEGAL deficit NZ$-16.454 billion (HYEFU NZ$4.061 bln)NZ$50 billion Covid-19 response and recovery fundNZ$4 billion business support package; including targeted NZ$3.2 billion wage subsidy extensionNZ Finance Minister says OBEGAL deficits will average 9.3% of GDP, or NZ$28 bln, from 2020 to 2022NZ Finance Minister says deficit seen reducing to 1.4% of GDP by 2024Govt plans to issue NZ$165 billion of bonds in 4 years to Jun 2024Sees unemployment rate peaking at 9.8%Forecasts 5.7% unemployment in FY ending June 2022Sees economy returning to growth by June 2022Government plans 8,000 extra new homes under Public Housing ProgramHousing Agency to borrow an extra NZ$4 billion over 4-5 yearsBudget surplus possible by FY June 2025Raise infrastructure spending by NZ$3 billion to NZ$15 billionPlans to issue NZ$60 billion in government bonds in 2020-21 year.Debt rating agency S
said the budget indicated a significant hit to the finances from the impact of Covid-19, but theyexpect the economy to recover faster than the budget assumes
. It expects improvement after fiscal 2021.
The NZD is marginally higher in immediate response.
Current indicative levels are:NZD-USD 0.5970 / 0.5995NZD-AUD 0.9290 / 0.9315NZD-EUR 0.5520 / 0.5545NZD-GBP 0.4885 / 0.4910NZD-JPY 63.85 / 64.10