Good public purse management keeps cost of credit down

Prudent management of the public purse is essential to keeping down the cost of credit said the New Zealand Bankers’ Association today in response to Budget 2012.

The Association supported moves to ensure borrowing costs for the government, householders and business owners do not increase unnecessarily. Initiatives that kept the NZ dollar at a realistic value were also important. A lower dollar made New Zealand more globally competitive and supported exports, including the important agricultural sector.

“Balancing the books and moving back to surplus will help our sovereign credit rating, which in turn will keep interest rates down for New Zealand households,” said New Zealand Bankers’ Association chief executive Kirk Hope.

“The credit rating agencies are paying close attention to us. If our credit rating goes down, our interest rates go up. A credit rating downgrade makes us look like a riskier bet to the funders, so it costs us more to source funds.

“The government is in line with households who are paying down their debt. It’s about living within our means. This responsible approach will keep us in good stead with the credit rating agencies.”

The Association was disappointed the Budget did not include more initiatives to lift New Zealand savings.

“We need some good policy thinking around how to improve our savings levels. This is important as it will reduce our reliance on foreign borrowing and provide us with a wider range of options and opportunities for future economic growth,” said Hope.