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New Zealand welcomes AA credit rating despite debt risk

Xinhua, March 22, 2016 Adjust font size:

The New Zealand government Tuesday welcomed the decision by ratings agency Standard and Poor's to reaffirm the country's AA credit rating and stable outlook.

Standard and Poor's highlighted New Zealand's fiscal settings, economic resilience and the Reserve Bank of New Zealand's credibility as factors in its decision to reaffirm the strong AA rating, Finance Minister Bill English said in a statement.

"Despite ongoing volatility internationally, Standard and Poor's expects the New Zealand economy to grow by an average of 2.7 percent over the next four years," said English.

One risk highlighted by Standard and Poor's was New Zealand's level of foreign debt, with net external debt at 55 percent of gross domestic product (GDP).

The New Zealand Treasury forecast core government net debt to be 27 percent of GDP in the 2015-2016 fiscal year before falling to around 20 percent of GDP in 2020.

That compared to current net debt levels of around 18 percent in Australia, 38 percent in Canada and 80 percent in Britain and the United States, said English.

New Zealand also had the top Aaa credit rating from Moody's, and was rated AA by Fitch. Endit