Credit rating agency S&P Global Ratings has reaffirmed New Zealand's AA+ rating with a stable outlook because of how well the country has handled the pandemic.
S&P Global Ratings says New Zealand has weathered the Covid-19 pandemic better than most countries. (Beehive pictured) Photo: RNZ / Angus Dreaver
It said the government's finances were healthy and strong enough to withstand any further economic shocks.
"New Zealand has weathered the Covid-19 pandemic better than most countries in terms of health, fiscal, and economic outcomes," the agency said in a report.
"We believe that New Zealand's relatively better management of the pandemic means that its credit metrics are in a good position to weather potential deteriorations associated with further negative pressures, including from a possible weakening of the real estate market, at its current rating level."
S&P Global said it was expecting a significant fall in budget deficits, which would allow government debt to decline.
It said a ratings upgrade would be possible if budget deficits fell below 1 percent of the value of the economy (GDP).
It said the high level of private sector debt, and high house prices were risks but there was financial headroom to cope with that.
"These improvements could mitigate risks associated with the country's property market and financial system at a higher rating level."
But it warned a downgrade would be on the cards if there were budget blowouts, which would result in higher debt and interest rate bills.
