Govt to radically reduce Govt bond tenders

By NZPA

Thursday 19th December 2002

The Government announced it would cut its borrowing programme for the current financial year to June 30 by $900 million to a total of $2.5 billion.

The forecast for 2003/4 financial year had also been cut back to $3.4 billion from a previous forecast of $5.6 billion, Minister of Finance Michael Cullen said in a statement accompanying the Government's December Economic and Fiscal Update (DEFU).

Economists had expected the Government to slice about $1.5 billion from the borrowing requirement over the next 18 months due to forecasts of increasing surpluses and falling government debt.

"Gross debt is already below the Government's target of 30 percent of gross domestic product and is projected to keep falling steadily," Dr Cullen said.

He was able to make the cut after announcing higher government budget surpluses with a $3.5 billion surplus forecast for 2002/03, rising to $3.8 billion, $4.5 billion and $5.2 billion in subsequent years.

The lower borrowing programme will put downward pressure on interest rates.

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