NZ Government finances 'comfortable' says IMF, in positive report on our economy

share

The International Monetary Fund says New Zealand is enjoying a solid economic expansion and growth is expected to remain around three per cent. 

New Zealand currency fifty dollar note money

New Zealand currency fifty, dollar note (file picture).

Source: istock.com

The IMF has today delivered its two-yearly review of the New Zealand economy. 

In making its assessment, a visiting IMF team of economists says among other things higher government spending is offsetting slowing residential investment and weaker agricultural exports. 

It also notes while net migration and potential output growth are expected to slow, the new KiwiBuild program should result in a gradual increase in residential investment growth. 

The IMF is broadly supportive of the Government's fiscal policy. And It welcomes the continued commitment to budget discipline and a medium-term debt anchor (net 20 per cent of GDP). 

However it says there is no need for faster debt reduction than outlined in the 2017 Half Year Economic outlook. 

When pressed further on whether the Government could relax its 20 per cent debt target to boost spending on infrastructure, the IMF team suggested New Zealand's fiscal position was "comfortable" and some relaxation could be helpful, depending however on the quality and appropriateness of any extra spending. 

Meanwhile the IMF has raised some concerns about the Government's foreign buyers ban, saying it is unlikely to have a significant impact on housing affordability. 

It says the broader housing policy, if fully implemented, would address most of the potential problems associated with foreign buyers on a less discriminatory basis. 

It also raises some issues about the free tertiary education policy. 

It says while the program could boost human capital, it could given the fiscal cost, include greater targeting based on needs. 

On Monetary Policy, the IMF seems comfortable with current settings and the recent mandate reforms.

However it says it would not support any further reduction in RBNZ loan-to-value ratios given household debt levels.

loading error

refresh

LATEST

POPULAR

FEATURED

news