New Zealand should spend cautiously, fiscal rules expected

© Reuters. FILE PHOTO: New Zealand’s finance minister, Grant Robertson, talks about the “wellbeing” budget in Wellington, New Zealand, May 30, 2019. REUTERS / Charlotte Greenfield / File Photo

By Lucy Craymer

WELLINGTON (Reuters) – New Zealand’s finance minister said on Tuesday the government should continue to be careful about spending and flagged the introduction of new fiscal rules in the budget next month.

“It’s really important that we use fiscal policy sensibly to be able to make sure New Zealand not only keeps a member on debt but that we invest in the right things,” Finance Minister Grant Robertson told a news conference.

He said new fiscal rules would be introduced at this year’s budget in May after some fiscal targets were previously suspended as the government responded to the COVID-19 pandemic.

But Robertson stressed that even as New Zealand must be careful with spending, infrastructure projects such as the overhaul of the country’s health system remains important.

“It’s important that we do not cut our nose off to spite our face and take away funding,” he said.

New Zealand’s central bank has raised interest rates at four consecutive meetings and signaled more hikes in coming quarters as it expects annual inflation to peak around 7% in the first half of this year.

Rising costs have also prompted calls from opposition parliamentary members for the government to use fiscal policy to help temper inflation.

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