1 December 2004

Cullen on Moody’s report

Finance Minister Michael Cullen has welcomed the latest analysis of the New Zealand economy by Moody’s ratings agency, saying it represents a significant endorsement of the government’s economic and fiscal management.

He was commenting on Moody’s statement that: New Zealand’s stable political environment, which has resulted in an institutional framework that consistently produces disciplined fiscal and monetary policies, is an important element in the Aaa ratings assigned by Moody’s to the country and its government.

“But the report also contains a caution for those parties which would introduce substantial tax cuts and/or spending increases.

“Moody’s notes that its judgement in confirming the Aaa rating is based on the expectation that government debt – barring temporary downturns in revenue due to external shocks – will not rise above current levels,” Dr Cullen said.

“This is consistent with the message of the OECD in a commentary on New Zealand released yesterday stating that additional fiscal stimulus at this point in the cycle would be unhelpful and would anyway need to be offset by higher interest rates in order to bring the economy back on to a sustainable growth path.”

ENDS

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