Rating agency praise for NZ's policies

New Zealand's triple-A sovereign credit rating and stable outlook are the result of low Government debt and market-oriented policies, says international ratings agency Moody's Investors Services.

In its annual report on New Zealand, the agency said the policies had "helped produce a strong flexible economy less subject to external shocks".

The report's author, Moody's analyst Steven Hess, said: "The non-partisan policy framework has been in favour of low Government debt and fiscal soundness.

"The Labour Party-dominated minority coalition Government is committed to operating surpluses and to keeping debt at a prudent level."

New Zealand's external liabilities seemed to be reducing as a percentage of GDP (gross domestic product).

"The current account deficit may be coming down to a lower level in relation to GDP on average, although this remains uncertain. It is likely to rise in the near term," Mr Hess said.

New Zealand's current account had a $6.004 billion deficit for the year to September.

Economists had expected the figure to be $6.113 billion. But the figure was worse than the $4.398 billion deficit for the previous 12 months.

Moody's said economic reforms since the 1980s may now be producing somewhat higher productivity growth and an increase in domestic savings.

Moody's raised New Zealand's sovereign credit rating two notches in October last year to triple-A.

Its previous AA2 rating, which reflected the gap between national savings and overseas debt.

A triple-A rating is the highest level.

- NZPA