NZ Government Forecasts Smaller Budget Deficit Ahead of Election

New Zealand Prime Minister Christopher Luxon is touting an improving fiscal position and stronger economy as evidence of his government's economic management credentials ahead of a general election.

The government forecasted a smaller budget deficit and lower debt than projected in its May Budget, with the operating balance before gains and losses (OBEGAL) deficit expected to be NZ$8.73 billion ($4.94 billion) in the fiscal year ending June 30, 2027, compared to a NZ$14.09 billion deficit forecast in May.

Luxon said this was 'good news' and attributed it to his government's responsible economic management, but opposition parties argue that the improved forecasts have yet to translate into meaningful relief for many New Zealanders.

ANZ economists noted that Treasury’s economic forecasts remain on the rosy side and that the eventual fiscal consolidation is dependent on both the outlook coming to pass and future governments sticking to the signalled operating and capital allowances.