8 December 2003 Media Statement

Moody’s report welcomed

Finance Minister Michael Cullen welcomed Moody’s reaffirmation today of New Zealand’s Aaa foreign currency credit rating, saying it amounted to a vote of confidence in the government.

“The report notes that the structural reforms since the 1980s have made the economy more resilient to external shocks and comments on New Zealand’s stable political environment and consistently disciplined fiscal and monetary policies.

“It says we have one of the most transparent government finance systems in the world with government debt well below the median as a percentage of GDP among advanced economies.

“These strengths were often obtained at some cost and require discipline to maintain so all New Zealanders can take some pride in the achievement,” Dr Cullen said.

Moody’s expressed some concern at New Zealand’s high private sector external debt levels but said there were a number of mitigating factors that made the country less vulnerable than the numbers alone might indicate.

These were that almost all the debt was either denominated in New Zealand dollars or hedged and that a large proportion of it was due to the funding of New Zealand banks by their overseas parents.

ENDS

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