New Zealand's debt level by the year 2034 is forecasted to be about NZ$60 billion ($43.3 billion) less than previously expected on the back of a strong recovery from the COVID-19 pandemic, the finance minister said on Tuesday.
New projections using the treasury’s fiscal strategy model show net debt now at 36.5% of GDP in 2034/35, Grant Robertson said in his 2021 Budget Policy Statement speech to business leaders in the capital Wellington.
"That represents about $60 billion less debt at the end of the projection period than at the pre-election update," he said.
Projections in September last year showed net debt falling from a peak of about 56% of GDP in 2024 to 48% of GDP in 2034.
Robertson said the government's objectives in this term would be keeping New Zealand safe from COVID-19, rebuilding from the impacts of the disease and addressing issues such as climate change, housing affordability and child poverty.
He said capital allowances are projected to increase by NZ$7 billion by 2033/34, which is earmarked for infrastructure investment.
The government also plans to announce a "rolling series of measures" to tackle a housing crisis in the country, Robertson said.
Property prices have skyrocketed in the last few months amid an acute shortage of affordable homes, record-low interest rates and eased mortgage lending curbs, putting home ownership out of reach for many New Zealanders.
The nationwide median house price rose by 17% between June and December last year, and sat 19% higher than at December 2019.
The finance minister blamed speculators and investors who crowded out New Zealand family members looking to buy a home for themselves.
"What we do know is that now is the time for bold action. The market has moved quickly and rapidly in a way that is not sustainable," Robertson said.
($1 = 1.3848 New Zealand dollars)
(Reporting by Praveen Menon in Wellington; Editing by Matthew Lewis)
