New Zealand’s finance minister has denied that the country’s new budget aims to appease voters ahead of the country’s next general election in October.
When asked if the budget was a short-term reflection to spend and worry about inflation and high deficits later, Grant Robertson replied: “No, we are absolutely doing both of those things at the same time. “
In an exclusive interview with CNBC on Friday, Robertson said, “I think sometimes finance ministers get accused of doing all kinds of things in election years, but really I think my job here is to help newcomers. Zealanders get through this tough economic time, but also look forward to the years ahead with somewhat lower inflation.”
His comments come after New Zealand has allocated millions for reconstruction following severe weather and announced measures to help people cope with the rising cost of living despite a larger-than-expected public deficit.
The country was planning on Thursday a deficit of NZ$7 billion ($4.37 billion) for the year ending June 2023, compared to a forecast last December for a deficit of NZ$3.6 billion.
New Zealand is also not expected to return to surplus until 2025-2026, a year later than expected. The Treasury sees inflation slowing to 3.3% by mid-2024 from the current blistering pace of 6.7%.
The Reserve Bank of New Zealand has warned that increased government spending could contribute to aggressive inflation which has already seen the central bank raise the official exchange rate by 500 basis points since October 2021, Reuters reported.
“We’ve been quite targeted and the cost of living support that we’ve put into this budget, particularly as you noted in relation to young families, and support for health costs and so on,” said Robertson at CNBC.
“We really had in mind to make sure that this budget contributed to lower inflation.”