By Paul McBeth

May 30 (BusinessDesk) - The government will borrow an extra $6 billion over the next five years to cover a shortfall in its cash flows to meet a $41.1 billion capital spending programme.

The New Zealand Debt Management Office will issue $8 billion in the year ending June 30, rising to $10 billion of government bonds in the 2020 and 2021 financial years, falling to $8 billion and $6 billion in the following years.

That’s an extra $5 billion of net bond issuance over the five-year horizon, and the DMO said it will issue an extra $1 billion of Treasury bills in 2020.

Finance Minister Grant Robertson last week signalled plans for a more flexible debt target range of 15-to-25 percent of GDP from the 2022 financial year.

The government has faced calls to take on more debt to fund infrastructure spending at a time when it’s able to sell bonds at sub-2 percent yields.

The self-imposed budget responsibility rules target net debt of 20 percent, a level the Treasury predicts the government will track over the next four years.

The DMO will issue $42 billion of gross bonds over the horizon, with $37 billion of maturities and repurchases, leaving it with $79.2 billion on issue in 2023.

The $3 billion of Treasury bills will rise to $4 billion in the 2021 year, before falling back to $3 billion in 2023.

The DMO expects to issue $500 million of inflation-indexed bonds in the 2020 financial year.

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