Budget 2020: Government to borrow extra $50 billion

The Government will borrow an extra $50 billion in the June 2021 fiscal year to mitigate the hit from the Covid-19 pandemic.

The impact of Covid-19 on the Crown's fiscal outlook was "unprecedented" and required a substantial increase to the forecast borrowing programme relative to the forecast at the Half Year Economic and Fiscal Upbeat 2019," the New Zealand Debt Management Office said.

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The forecast 2020-21 bond programme is now set at $60 billion versus the $10b forecast in the December HYEFU.

In the following year, the bond programme has been revised higher to $40b, followed by $35b in the June 2023 year and $30b in June 2024.

The December HYEFU forecasts were for $8b in the June 2022 and 2023 years and $6 in 2024.

By the end of the forecast period, gross New Zealand government bond issuance would be $190b, the DMO said.

Taking into account maturities and repurchases, net issuance will be $142.4 billion.

Treasury bills on issue are forecast to be $10 billion across the forecast period.

Meanwhile, subject to market conditions it expects to launch a new nominal bond via syndication between June 30 and September 30. The maturity will be confirmed before syndication.

A syndicated tap of an existing bond is also expected to take place this time.

Finally, issuance into inflation-indexed bonds is expected to be between $1b and $2 in 2021, subject to market conditions.

The big-ticket items of today's Budget include:

• A $3.2 billion extension of the wage subsidy scheme.
• A $1.2 billion railway package.
• A $3 billion infrastructure investment package.
• A $1.6 billion trades and training scheme.
• A $220 million expansion of the school lunches initiative.
• A $400 million targeted tourism support fund.
• A $830 million disability support package.

- BusinessDesk