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New Zealand Debt Management Investor Update
June 2021

Executing the Government's borrowing requirements with a goal of managing debt in a way that minimises costs over the long-term while keeping risk at an appropriate level.

Economic and Fiscal Update

The Budget Economic and Fiscal Update 2021 (BEFU) showed that the Treasury expects the economy to strengthen from the second half of the 2021 calendar year, as tourist numbers start to recover and government spending supports consumption and investment. The fiscal outlook continues to show signs of recovery, with operating deficits expected to narrow to NZ$2.3 billion by 2024/25 (Figure 1), while net core Crown debt as a percentage of GDP is expected to fall from 2022/23 onwards.

Some highlights from the Wellbeing Budget 2021 included: lifting weekly main benefit rates by between NZ$32 and NZ$55 per adult; NZ$300 million additional capital for New Zealand Green Investment Finance; a previously announced NZ$3.8 billion Housing Acceleration Fund to support the supply of public, affordable and market housing; and NZ$4.7 billion in new health operational funding and up to NZ$968 million in health capital investment.
NZ$5.1 billion in the COVID-19 Response and Recovery Fund (CRRF) remains unallocated, relative to NZ$10.3 billion at the Half Year Economic and Fiscal Update 2020 (HYEFU). The unallocated funding will largely be focused on any future resurgence and the economic recovery from the impacts.  
The interim Financial Statements of the Government of New Zealand for the ten months ended 30 April 2021, released by the Treasury today, show a stronger overall fiscal position for the Crown compared to forecasts based on the recent BEFU.
For further up to date economic indicators read the Treasury’s latest Weekly Economic Update.

Figure 1: Operating balance excluding gains and losses
Source: Treasury

Monetary Policy Update

At their latest meeting, the Reserve Bank of New Zealand’s Monetary Policy Committee kept the Official Cash Rate (OCR) at 0.25 percent and left the Large Scale Asset Purchase and Funding for Lending programmes unchanged. The Committee said that they would maintain the current stimulatory monetary settings until they are confident that consumer price inflation will be sustained near the 2 percent per annum target midpoint and that employment is at its maximum sustainable level.

Government Bond Market Developments

In conjunction with the BEFU, New Zealand Debt Management (NZDM) updated the forecast core Crown borrowing programme.
The forecast 2021/22 New Zealand Government Bond (NZGB) programme is set at NZ$30 billion, unchanged from that published at the HYEFU. The forecast NZGB programmes for 2022/23 and 2023/24 have been decreased by NZ$5 billion in each year to NZ$25 billion, reflecting changes to forecast cash requirements. The 2020/21 and 2024/25 programmes are both unchanged at NZ$45 billion and NZ$25 billion respectively (Figure 2).
NZDM also announced it expects to issue two new NZGBs via syndication, in 2021/22, subject to market conditions. It is expected that the first will be a 2051 nominal NZGB, prior to 31 December 2021. Further details of the second will be announced in subsequent updates.
NZDM also recently published the June tender schedule.

Figure 2: Change in NZGB Programme Forecasts
Source: Treasury

COVID-19 Update

There are currently no detected cases of COVID-19 outside Managed Isolation and Quarantine facilities. The whole country is currently at Alert Level 1, where there are no restrictions on social gatherings.

Upcoming events

2032 Nominal Bond Syndication - Week starting 7 June 2021
2051 Nominal Bond Syndication - Prior to 31 December 2921
Contact us

This E-Newsletter has been prepared by the Treasury on behalf of the New Zealand Government and is for general information purposes only. By reading the E -Newsletter materials, you acknowledge and agree to the contents of following disclaimer.

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