WELLINGTON, March 29 (Reuters) - New Zealand's finance minister said there will be less money for new spending in this year's budget as the government looks to contain a rising deficit and return to surplus.
The deficit is expected to reach as much as 8 percent of gross domestic product this year because of the added costs of the devastating earthquake in the country's second-biggest city last month, Finance Minister Bill English said on Tuesday.
He said that would mean a cap on new spending below the previous maximum of NZ$1.1 billion as the government still aimed to get back into the black as soon as possible.
'We believe if we make careful decisions about government spending we can still get back to a meaningful surplus in 2015/16,' English said in a speech to a conference.
Last year's budget forecast the budget would be back to surplus in 2014/15, a forecast reaffirmed in the half year fiscal update in December.
However, the 6.3 magnitude earthquake which struck Christchurch on Feb. 22, killing at least 166 people, compounded damage and costs already suffered after a 7.1 quake in the region last September.
Initial estimates put the cost of the damage of the quakes as high as NZ$15 billion ($11 billion), about seven percent of GDP, with the government seen bearing 'ballpark' estimated costs of both quakes of NZ$10 billion.
English said the pressure on public finances were such that smaller, more efficient government was needed, effectively meaning that spending restraint of the past few years is now permanent.
Earlier this month, English estimated the operating deficit before gains and losses (OBEGAL) for the year to June 30 would likely rise to more than 8 percent of GDP, or more than NZ$16 billion, from the NZ$11.1 billion forecast in December.
Preliminary budget forecasts indicate net government debt will now exceed 30 percent of GDP by June 2014, up from around 28 percent in the December update.
(Reporting by Adrian Bathgate) Keywords: NEWZEALAND ECONOMY/ENGLISH (Adrian.Bathgate@thomsonreuters.com)(+64 4 471 4233)(Reuters Messaging: adrian.bathgate.thomsonreuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The deficit is expected to reach as much as 8 percent of gross domestic product this year because of the added costs of the devastating earthquake in the country's second-biggest city last month, Finance Minister Bill English said on Tuesday.
He said that would mean a cap on new spending below the previous maximum of NZ$1.1 billion as the government still aimed to get back into the black as soon as possible.
'We believe if we make careful decisions about government spending we can still get back to a meaningful surplus in 2015/16,' English said in a speech to a conference.
Last year's budget forecast the budget would be back to surplus in 2014/15, a forecast reaffirmed in the half year fiscal update in December.
However, the 6.3 magnitude earthquake which struck Christchurch on Feb. 22, killing at least 166 people, compounded damage and costs already suffered after a 7.1 quake in the region last September.
Initial estimates put the cost of the damage of the quakes as high as NZ$15 billion ($11 billion), about seven percent of GDP, with the government seen bearing 'ballpark' estimated costs of both quakes of NZ$10 billion.
English said the pressure on public finances were such that smaller, more efficient government was needed, effectively meaning that spending restraint of the past few years is now permanent.
Earlier this month, English estimated the operating deficit before gains and losses (OBEGAL) for the year to June 30 would likely rise to more than 8 percent of GDP, or more than NZ$16 billion, from the NZ$11.1 billion forecast in December.
Preliminary budget forecasts indicate net government debt will now exceed 30 percent of GDP by June 2014, up from around 28 percent in the December update.
(Reporting by Adrian Bathgate) Keywords: NEWZEALAND ECONOMY/ENGLISH (Adrian.Bathgate@thomsonreuters.com)(+64 4 471 4233)(Reuters Messaging: adrian.bathgate.thomsonreuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.