RPT-NZ Finmin sees bigger budget surpluses after 2016 on stronger growth
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WELLINGTON Dec 17 (Reuters) - New Zealand Finance Minister Bill English said on Tuesday the government would post bigger-than-expected budget surpluses in 2016 and 2017 because of a strongly growing economy, although it would be a challenge to achieve a surplus in 2015 due to lower-than-expected asset sale proceeds.
The government raised its surplus forecast fractionally to NZ$86 million in 2014/15 from the May budget forecast of NZ$75 million, while it sees surpluses of NZ$1.7 billion and NZ$3.1 billion in 2015/16 and 2016/17, respectively.
The government sees the economy growing 3.6 percent in 2014/15, more than its initial forecast of 2.8 percent, which would make the country a strong economic performer relative to other developed nations.
"We remain on track for a surplus in 2014/15, although it will be a challenge to reach an actual surplus in that year," English told reporters after the government published its half-year budget forecast.
Earlier this month, the government said it expected that partial asset sales would raise NZ$4.6 billion to NZ$5 billion, below its initial forecast for NZ$5 billion to NZ$7 billion.
New Zealand's economy is growing at a strong clip as soaring global prices for the country's agricultural commodities boosts its export sector, while earthquake reconstruction projects in the Canterbury region adds to economic activity.
The government's forecast of 2.8 percent growth this year would put New Zealand among best performing developed economies, given that many countries are anticipating less than 2 percent annualised growth in the coming years.
But English said that a historically strong currency could create risks for the export industry, which could curb economic growth.
"The affect of a high currency ... could provide significant headwinds in rebalancing the economy towards the export sector," the finance minister said.
He said the government would maintain strong controls on spending, despite an increase in its tax take, to help keep a lid on interest rates for longer. (Reporting by Naomi Tajitsu; Editing by Shri Navaratnam)