NZ prepared to weather possible U.S. debt crisis: finance minister

15:01, August 02, 2011      

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New Zealand Finance Minister Bill English Tuesday said the country was in relatively good shape to weather any fallout caused by the U.S. debt ceiling crisis, despite the fact that the crisis has hampered New Zealand's export- driven economy by driving up the currency.

English said the government's measures to rein in debt and country's sound financial system left the economy in "better shape than a few years ago to manage global uncertainties."

"Despite a compromise deal being reached in Washington, there is no doubt the situation in the United States is serious -- both for the U.S. itself and for the global economy," English said.

"However, New Zealand is relatively better placed than many other countries to manage in what will remain a pretty uncertain global environment. We're getting on top of debt by keeping it below 30 percent of GDP and we will be back in surplus by 2014- 2015."

He also credited the establishment of the Financial Markets Authority regulator and the introduction of minimum capital adequacy and credit rating requirements with raising investor confidence.

The Reserve Bank of New Zealand has introduced core funding requirements that require banks to have 70 percent of their funding from stable sources such as retail deposits and long-term wholesale fund, and ensured it can shore up sound financial institutions in the event of a crisis.

"The high Kiwi dollar is undoubtedly a headwind for New Zealand exporters, reflecting weakness in the U.S. dollar as well as a perception in financial markets that New Zealand remains a safe place to invest," said English.

"It means we need to do everything else we can to build on the resilience and higher business confidence we're seeing. That includes keeping on top of debt and building a faster-growing economy."

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