IMF Dubbed New Zealand Finances as ‘Comfortable’

The International Monetary Fund issued its two-yearly assessment for New Zealand and showed that the country benefited well from the strong economic growth and its expansion is projected to remain at three percent. According to the visiting team of IMF, the increasing government expenditure offset the slackening residential investment along with sluggish agricultural exports. Also, net migration and the possible output growth would likely weaken because of the new KiwiBuild program that further slowed down the growth of residential investment

The Washington-based organization mainly support the fiscal policy of the government, wherein it accepts commitment towards budgetary discipline and medium-term debt anchor with 20 percent net of GDP. Nonetheless, they believe that debt relief strategy is not necessary to process hurriedly as indicated in the outline of 2017 Half Year Economic outlook.

The IMF team suggested that the fiscal position of New Zealand seems “comfortable” when it talks about the 20 percent debt target in order to increase infrastructure spending. Also, being relax would help the country in spending based on quality and appropriateness. On the other hand, the IMF mentioned its concerns about the anti-foreign buyer's ban by the government that is improbable to affect housing affordability. In case that housing policy will be totally implemented, the discriminatory issues and other possible concerns regarding foreign buyers would be less. This would also deal with problems regarding free tertiary education policy. Moreover, the program has the potential to raise human capital alongside the fiscal cost including target precision according to needs.

In terms of Monetary Policy, the IMF implies a comfortable environment at present and the previous mandate reforms. But this would not support the reduction in the Reserve Bank of New Zealand’s (RBNZ) loan-to-value ratios inclined to household debt levels.