The New Zealand budget will return to fiscal surplus in 2014/15, Finance Minister Bill English said in his budget speech on Thursday.
The fiscal surplus for the year ending June 2015 is seen at NZ$197 million, improving from a NZ$8.4 billion deficit this year. Nonetheless, the surplus for 2014-15 was smaller than the prior projection of NZ$370 million.
The surplus is forecast to grow to NZ$2.1 billion in 2015/16 and to NZ$4.4 billion in 2016/17.
"These surpluses will allow the Government to rebuild New Zealand's resilience to further shocks, help lift national savings, keep interest rates lower for longer, take pressure off the exchange rate, and reduce future finance costs," said English.
The budget deficit will be 4.1 percent of GDP in 2012-13 and net debt is seen at 25 percent of GDP.
The rebuilding of Christchurch will be a key driver of domestic activity and is expected to contribute about one percentage point to annual growth in each calendar year from 2012 to 2016.
Looking forward, English said growth is forecast to rise to more than 3 percent in 2014/2015. GDP growth is projected to improve to 1.6 percent in 2012 and then to 2.6 percent in 2013.
The Treasury expects a net 154,000 new jobs over the next four years. Unemployment is forecast to drop below 5 percent by 2015. Before easing to that level, the rate is seen at 6.3 percent in 2012 and 5.7 percent in 2013.
The central bank is forecast to start raising interest rate from its current 2.5 percent in early 2013.
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