New Zealand's government is heading into an election year with deeper-than-expected budget deficits and a delayed return to surplus, as economic recovery takes longer to gain traction.
According to Treasury Department forecasts in the half-year fiscal and economic update, the operating balance is now projected to return to surplus in the year ending June 2030—pushing back the May budget's earlier 2029 target.
Finance Minister Nicola Willis, however, remains optimistic about reaching surplus a year earlier in 2029, though she previously aimed for 2028.
"Achieving these fiscal goals will require ongoing restraint and tight control of discretionary spending," Willis said, adding that government agencies have been instructed to continue seeking savings and efficiencies to maintain fiscal discipline.
If the projections hold, New Zealand will run a budget deficit for at least 10 consecutive years through 2029.
Since taking office in late 2023, Willis has pursued savings through spending cuts, public sector job reductions, and prioritisation of government programs, achieving annual savings of about NZ$11 billion, she noted.