3 May 2012

Government has room to move on surplus - ratings agency

6:10 am on 3 May 2012

International ratings agency Standard & Poor's says New Zealand's prized AA rating could be safe even if the Government misses its target of returning to surplus.

The Government aims to return to surplus by the the 2014/2015 financial year despite a $1 billion turnaround in the most recent operating balance forecasts.

The agency's New Zealand analyst Kyran Curry is confident this could be achieved, but he says if the world economy takes another dive, the Government can afford to get back to surplus a year later than planned and keep its AA credit rating.

Mr Curry says the goal should not be pursued at all costs given recent experience in Europe which shows governments can overdo spending cuts to the detriment of economic growth and their overall fiscal position.