NZ: Long
term debt target tougher to reach
The
Government is facing a tougher time getting debt down as quickly as
it had planned.
19
Deecember, 2012
In
its Half Year Fiscal and Economic Update on Tuesday the Treasury cut
forecasts for average annual growth to 2017 to 2.5% from 3% forecast
in May's Budget.
The
Budget had predicted surpluses large enough from 2014/15 to bring
down the Government's net debt to 20% of GDP by 2020.
Finance
Minister Bill English says the lower growth forecasts means the
surpluses won't be large enough for that to happen, but the
Government hasn't given up on the target.
"We
need to work towards achieving that goal of getting us back to the
position where we can handle the next recession, or the next
earthquake."
Westpac
Bank says that means the Government could keep a tighter rein on
spending for longer but the Council of Trade Unions says it should
boost spending to stimulate the economy and bigger surpluses.
Meanwhile,
credit rating agency Moody's says the lower growth and higher debt
forecasts have not been enough to dent country's AAA rating.
Government accused of obsession over surplus
Despite
the new growth forecasts the Government is sticking to its target
returning its books to surplus in 2014/15
The
petrol tax will be increased by nine cents a litre over the next
three years, and recommendations by the ACC board to reduce levies
for employees, employers and the self-employed will be ignored.
The
Government says that will add more than $400 million to the coffers
and help it get back into surplus.
The
Labour Party says the Government has put too much on its Christmas
wish list and is now having to scramble to find the money.
The
Greens say these decisions are motivated by the desire to reach
surplus as promised rather than protecting cash-strapped New Zealand
families.
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