The New Zealand government is facing increased budget deficits and a delayed return to surplus as the economic recovery takes longer than expected to gain traction. According to new forecasts released by the Treasury Department on Tuesday, the operating balance is now projected to return to surplus in the year ending June 2030. This represents a delay from the May budget, which anticipated a surplus in 2029. The half-year fiscal and economic update was released in Wellington.
Despite the updated forecasts, Finance Minister Nicola Willis maintains her target of achieving a surplus a year earlier, in 2029. Willis stated that achieving these fiscal goals will necessitate ongoing restraint and strict control of discretionary spending. She added that government agencies have been instructed to continue seeking savings and efficiencies to support this disciplined approach. Previously, the Minister aimed to reach a surplus in 2028.
If the Treasury’s projections hold true, New Zealand’s budget will remain in deficit for at least 10 consecutive years through 2029. Since assuming office in late 2023, Willis has focused on achieving savings through various measures, including cutting spending, reducing the public sector workforce, and prioritising government programs.
According to Willis, these efforts have resulted in annual savings of approximately $NZ11 billion ($US6.4 billion). The New Zealand Treasury provides economic and financial advice to the government. Its forecasts are closely watched by financial markets and businesses.
