By 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.
Mr Willis, speaking at the Employers and Manufacturers Association in Auckland ahead of the release of the government’s budget and fiscal outlook on May 30, said the worsening economic outlook was making debt reduction efforts even more difficult.
“But in the words of a Florence and the Machine song I recently quoted, the darkest is 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 half-yearly economic update published in December projected an operating deficit excluding profit and loss of NZ$6.14 billion ($3.75 billion) for 2024-25, improving from a forecast deficit of NZ$9.32 billion for the year ended June 30.
However, since then the economic situation has deteriorated and the country is currently in a technological recession.
Willis said details of how the government plans to get the budget back in surplus will be announced next week, along with operating allowances in future budgets.
“These allowances represent the amounts available for discretionary spending and revenue initiatives in the next three budgets.”
($1 = NZ$1.6375)
(Reporting by Lucy Kramer; Editing by Christopher Cushing)
