The New Zealand budget 2011-12 is predicted to see a budgetary deficit of 4.7 percent of the GDP in 2011-12, which is estimated to come down to 1.8% of the GDP in 2012-13 fiscal.
New Zealand Budget 2011-12: Highlights:
It is estimated that in 2011-12 New Zealand will see a budgetary deficit of 9.7 billion New Zealand dollars.
This will be reduced to NZ$ 4.1 billion in 2012-13.
The 2011-12 budget could see some deduction in the assistance being provided to the students and families.
There could be some changes to the pension savings program, Kiwisaver.
Economists have forecast that New Zealand could grow by 2.4 percent in the upcoming fiscal.
In 2011-12 fiscal the defense budget is expected to go up to 2.9 billion NZ dollars.
The increase is of 2 percent and is being seen as a nominal one.
New Zealand Defense Budget 2011-12:
Majority of the money earmarked for the defense budget will go to the army. In 2010-11 it had been allotted 843 million NZ dollars and this has come down to NZ$832 million in 2011-12. This is the second straight year when the army has seen a reduction in its share The land combat forces will be provided at least 380 million NZ dollars.
The Navy will see an increase of 20 million NZ dollars their allocation has reached approximately 693 million dollars for 2011-12 fiscal. It has a couple of Anzac-class frigates, which are its costliest properties and account for NZ$408 million, which is more than 50 percent of the Navy s allotment.
The Air Force will receive an increased allocation of 670 million NZ dollars and this is the third consecutive year that their budget allotment has increased. 40% of this amount will be used up by the air force fleet of 2 Boeing 757s and 5 C-130H Hercules.
New Zealand Budget 2011-12: Credit Ranking Situation:
Kyran Curry, a sovereign financial analyst, has stated that due to the policies prescribed in the 2011-12 budget New Zealand�s economy could experience a surplus amounting to 0.5 percent of the GDP in 2014-15. In financial terms, this is going to amount to 1.3 billion New Zealand dollars.
Curry has further stated that in the upcoming fiscal the government will try to borrow extra money in order to cover the expenses incurred owing to the recent earthquakes. But this will also take New Zealand�s debts to almost 37.9 percent of the GDP by 2013-14 fiscal. This, though, will be 50 percent of the average debt percentages of countries that have an AA rating from Standard & Poor�s.
The credit rating of New Zealand by S&P shows the flexibility in its fiscal and monetary policies, the strength of its financial institutions, the overall toughness of its economy and the commendable position of its currency. Still, the credit capability of New Zealand has been hit hard by its high level of external debts.
Curry states that New Zealand�s position could be in further jeopardy if its external debt situation did not improve anytime soon. He opines that an important part of the whole process will be achieving the fiscal targets set by the government.
Provided there is an increase in the expenses for funding the real cross border interbank operations, New Zealand will have less time to deal with the present condition of its public finances.
But, if New Zealand sees some unexpected betterment in its external accounts, which is most likely to happen due to good performance of the export sector and substantial public savings, then its ratings will stay at the present levels.