FX.co ★ New Zealand Narrows Budget Gap Forecast

On Thursday, New Zealand forecasted a reduced budget deficit of NZ$14.74 billion for the fiscal year concluding on June 30, 2025. This figure marks a decrease from the NZ$17.32 billion shortfall anticipated in the half-year fiscal update released in December. The adjustment highlights the country's commitment to fiscal prudence amidst a global tariff conflict. Expected operating expenditure for 2025 is set to average NZ$1.3 billion annually, which is the lowest in a decade. Concurrently, net debt, excluding advances, is projected to reach its highest point at 46% of GDP in 2027/28, marginally lower than the predicted peak of 46.5% for 2026/27 as stated in the December forecast. In parallel, the New Zealand Debt Management Office (NZDMO) has reduced its short-term bond issuance strategy. For the 2025/26 fiscal year, gross bond issuance is projected to be NZ$38 billion, a decrease from the NZ$40 billion forecasted in December. Nevertheless, the government has increased its total bond issuance estimate for the four-year period ending June 2029 to NZ$132 billion, up from the previous projection of NZ$128 billion.