Chance of NZ Credit Downgrade Slim

May 25, 2009 New Zealand FinanceNew Zealand Taxation  No comments

New Zealand Prime Minister John Key has said that he does not expect New Zealand’s credit to be downgraded after the release of the May 28th Budget.

Despite warnings earlier this year by credit rating agency Standard & Poor, John Key believes that New Zealand government has changed its economic track enough to ensure that no credit downgrade will occur.

As an indicator of economic stability and certainty, the credit rating has a direct effect in the cost of financing that New Zealand will face. It is therefore in the interest of all New Zealanders that the rating not drops. John Key said, in an interview on TV One show “Breakfast” that such a downgrade would see roughly 2% in interest rates.

John Key has stated previously that the new budget would be a slimmer one then seen previously. Also he claimed that there have been savings and increases in efficiency with government spending, to aid in maintaining a good credit rating while not cutting back in entitlements to New Zealanders.