The task of returning to budget surplus by 2014-15 in challenging and it requires tight control over spending, New Zealand Finance Minister Bill English said Thursday.
"Returning to surplus by 2014/15 is a significant challenge, requiring tight control over spending for the foreseeable future," he said in a speech before the Wellington Employers' Chamber of Commerce .
The scale of the challenge was again highlighted in preliminary Budget estimates, the minister said, adding that the estimates revealed a NZ$1 billion deterioration in preliminary forecasts of the operating balance before gains and losses in 2014/15, compared to the Budget Policy Statement in February.
In other words, the preliminary Budget estimates showed NZ$640 million deficit in 2014/15, compared to the NZ$370 million surplus predicted earlier.
However, the government is determined to keep the economy on track to achieve the goal by running what will be very close to a zero budget, meaning little new net government spending in this Budget out to 2014/15.
"It's important that we return to surplus because New Zealand is one of the most indebted countries in the world as measured by our net international investment position," English said.
"We need to start rebuilding a buffer for when the next global crisis comes along. Surpluses give us choices we simply don't have while we're running deficits," he added.
English said the government intends to strengthen the Public Finance Act so there are more checks and balances on ministers' spending decisions and their long-term effects.
by RTT Staff Writer
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