New Zealand Govt Trims Spending Plans On Weakening Global Economy, China Slowdown

New Zealand government clamped down on spending in order to find permanent savings as a deteriorating Chinese economy and failing tax revenue put pressure on fiscal goals.

Finance Minister Grant Robertson said his government plans to save around NZ$4 billion over the forecast period. This money will all be treated as savings and it is not being made available for any other programmes, the minister said in a statement.

“Since May we have seen further deterioration in the global economy, particularly in China,” Robertson said.

“This will continue to have a direct impact on the New Zealand economy, and it is important that the Government responds to meet our balanced and responsible fiscal goals.”

The government demanded public agencies to make savings, including reducing spending and cutting back on consultants and contractors. Spending on contractors and consultants are estimated to be below 11 percent of Public Service workforce spending.

“The economy is turning a corner, but inflation remains sticky,” Robertson said. “It is trending down but is doing so slower than we would like so we are doing our bit to help nudge it downwards faster.”

The government also decided to trim back the Budget allowances in the 2025/26 by NZ$250 million and those for 2026/27 by NZ$500 million.

Further, public sector agencies are being required to trim one or two percent off their existing baselines.

These measures are intended to ensure that fiscal goals are met and to keep debt under 30 percent of GDP as well as to get the books back into surplus in the forecast period.

Source: Read Full Article