NZ Govt to make biggest ever debt repayment

John Key File photo

The Government will have to make its largest-ever debt repayment of $7.6 billion in November and has been stockpiling cash to pay it.

The revelation comes after it was reported last month the Government was borrowing $19.9b, $5b more than required to fund the $14.9b cash deficit.

A Treasury paper dated May 3, obtained by Radio New Zealand under the Official Information Act, forecast $7.6b would have to be repaid to investors holding Government bonds due to mature on November 15.

Treasury said it was the largest-ever debt repayment and it naturally carried a high level of risk.

Specific targets for meeting repayments had been set and Treasury was holding enough cash to repay the debt, but it also warned the Government's finances were volatile and being monitored daily.

Finance Minister Bill English last month said the Government had stepped up its borrowing to $380 million a week - more than the $300m a week it had earlier said it was borrowing.

Mr English said that had been to take advantage of good interest rates, and the amount of overall borrowing needed was unchanged.

From this month onwards new borrowing would drop down to $100m a week on average over the next three years, he said.

The Treasury papers showed the Government will borrow $270m a week as a rolling average over four years, taking into account this year's existing borrowing.

- NZPA