Lucy Kramer
WELLINGTON (Reuters) – New Zealand's budget deficit is expected to worsen next year due to a worsening economic outlook, Treasurer Nicola Willis warned in a speech on Thursday.
Treasurer Willis told the Employers and Manufacturers Association in Auckland ahead of the government's budget and outlook on May 30 that the worsening economic outlook made debt reduction efforts much more difficult.
“But in the words of a Florence and the Machine song I recently quoted, it’s darkest before the dawn. Next year could be even bigger than this year before the deficit starts to improve. That’s to be expected,” Willis said.
The government's semi-annual economic update in December predicted an operating deficit of NZ$6.14 billion ($3.75 billion) in 2024-25, excluding profit and loss, for the year ending June 30. This improved from the expected deficit of NZ$9.32 billion.
However, the economic situation has deteriorated since then and the country is now in a technical recession.
Willis said details of the government's plans to return the books to surplus, as well as operating provisions for future budgets, would be announced next week.
“These allowances represent amounts available for discretionary spending and revenue initiatives in the next three budgets,” he said.
(1 dollar = 1.6375 New Zealand dollars)
(Reporting by Lucy Kramer and Christopher Cushing Editing)
