New Zealand gov't sets new target of cutting debt by 2025

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Added On April 27, 2017

WELLINGTON, April 27 (Xinhua) -- The New Zealand government has set a new medium-term target of cutting net debt to between 10 percent and 15 percent of gross domestic product (GDP) by 2025, Finance Minister Steven Joyce said Thursday.

"We have made great progress in our immediate target of reducing net debt to around 20 percent of GDP by 2020," Joyce said in a statement.

"Net debt is expected to be at 24.3 percent of GDP by the end of this financial year. Now it's time to set a new target for net debt out to the middle of the next decade."

It was appropriate that any new debt target helped provide the capacity to absorb future shocks.

"We have learnt from the Global Financial Crisis (GFC) and the Canterbury earthquakes that shocks can come along at any time, and sometimes they come in pairs," said Joyce.

"In taking the decision to support New Zealand's most vulnerable people through the GFC, and to support Canterbury after the quakes, we had to borrow significant sums of money. All up we borrowed the equivalent of around 20 percent of our GDP," he said.

"We are a geologically young country, and we are also a small country in an often turbulent world, so there are plenty of shocks ahead of us."

With net debt at around 10 percent to 15 percent of GDP, New Zealand would have the capacity to absorb a couple of big shocks at once.

The government would also allocate 11 billion NZ dollars (7.6 billion U.S. dollars) in new capital infrastructure over the next four annual budgets, Joyce said.

"We are investing hugely in new schools, hospitals, housing, roads, and railways. This investment will extend that run-rate significantly, and include new investment in the justice and defence sectors as well," he said. Enditem