Risks of higher borrowing
Willis linked the warning to proposals from opposition parties, arguing that excessive borrowing could threaten the nation’s credit standing.
“That is Fitch telling us that borrowing a lot more, as opposition parties are proposing, would lead to a credit downgrade,” she said. “That would increase the cost of government debt and also have a flow-on effect to the cost of household and business borrowing, as New Zealand would be seen as a more risky country to lend to.”
According to Westpac, while the economy is forecast to grow 2.4% in 2025 and 3.1% in 2026, fiscal credibility remains critical.
“There’s a non-trivial risk that credit rating agencies might stop giving us the benefit of the doubt, increasing the stakes for fiscal management in coming years,” chief economist Kelly Eckhold said.
Commitment to surplus and growth
Willis reiterated the government’s focus on rebuilding the fiscal position while maintaining support for public services.