Moody’s reaffirms NZ’s top Aaa credit rating

Leading credit rating agency Moody’s Investors Service has reaffirmed New Zealand’s Aaa sovereign credit rating with a stable outlook, noting the strength of the economy and improving government finances.

“This is a further endorsement of the Government’s responsible economic and fiscal programme,” Finance Minister Bill English says.

“Moody’s notes that New Zealand’s economy is growing relatively strongly, despite a steep fall in dairy prices during 2014. Compared to similarly rated countries, it says that New Zealand has a track record of faster and more stable growth in recent years.

“In addition, Moody’s has assessed New Zealand’s fiscal strength as very high. This reflects a debt burden that is lower than the median for Aaa-rated countries, along with the prospect of a return to budget surplus.”

Mr English says the Government’s spending restraint and falling debt as a proportion of gross domestic product have again been recognised by Moody’s.

It notes that the National-led Government is committed to not raising taxes and that its strategy for returning to surplus is based on expenditure restraint. This will allow spending to fall to below 30 per cent of GDP during the coming four years – down from a peak of 34.6 per cent in 2010/11.

“As Moody’s notes, New Zealand’s main vulnerability is its external debt and structural current account deficits,” Mr English says. “Both of these indicators have improved somewhat in recent years and the Government is focused on further improvement through its economic programme.”

New Zealand is one of only 14 countries with the top Aaa rating and a stable outlook with Moody’s.

Moody’s credit analysis of New Zealand is available at: https://www.moodys.com/research/Moodys-New-Zealands-economic-growth-supports-Aaa-rating--PR_319984