New Zealand - Budget and National Debt

New Zealand National Budget 2021 The Minister of Finance, Hon Grant Robertson, delivered the The Wellbeing Budget of 2021 on Thursday, 20 May 2021. According to New Zealand’s The Treasury, “Budget 2021 supports the long-term wellbeing of New Zealanders by making significant progress towards our Government priorities this term to: • continue to keep Aotearoa New Zealand safe from COVID-19 • accelerate the recovery and rebuild from the impacts of COVID-19, and • lay the foundations for the future, including addressing key issues, such as our climate change response, housing affordability and child poverty In addition to a core $3.8 billion operating per year Budget 2021 package, we are funding a number of initiatives from the COVID-19 Response and Recovery Fund (CRRF) to support our recovery and rebuild from COVID-19. The CRRF retains a $5.1 billion buffer for us to respond to future resurgences of COVID-19.” Figure 1. New Zealand: Budget balance between 2016 to 2026 in relation to GDP New Zealand’s budget balance in relation to its GDP has consistently been above 1% prior to 2019; however, it has experienced another significant disruption in 2019 causing a large change in it’s figures. The budget has decreased by -3.41% from 2018 to 2019 and experienced an even drastic drop from 2019 to 2020 of -3.43%. This is likely due to the government shifting to a more wellbeing-based in terms of their overall priority and objective and, als, may have been affected by the COVID-19 situation. Likely caused by large decreases in economic activity due to tourist bans and other factors. National Debt Figure 2. New Zealand: National debt from 2016 to 2026 in billion U.S. dollars Prior to 2019, the trend for New Zealand’s national debt has been projecting downwards; however, it experienced a significant disruption in 2019 and has an upward projection from 2019 onwards. This is likely due to the COVID-19 pandemic situation which brought New Zealand into minimal lockdowns and tourist bans. New Zealand, debt, budget, fiscal policy, aggregate demand Links: https://www.treasury.govt.nz/publications/budgets/budget-2021 https://www.treasury.govt.nz/sites/default/files/2021-05/b21-at-a-glance.pdf https://www.statista.com/statistics/531824/national-debt-of-new-zealand/ https://www.statista.com/statistics/436525/new-zealand-budget-balance-in-relation-to-gdp/