Ratings agencies watch effect of quake

The Government will take into account the cost of rebuilding Christchurch. Photo / Simon Baker

The ratings agencies are looking for a timely return to surplus despite the Canterbury earthquakes. They will also be watching for any policies that affect the country's savings rate.

Standard & Poor's, which put New Zealand's AA+ credit rating on negative outlook in November, will be watching incentives to save as well as net external liabilities levels in the Budget today.

"This Government has mentioned that it would be making some careful considerations to factor in the repair and reconstruction efforts related to the earthquakes while at the same time maintaining a level of fiscal consolidation that the Government has expressed very strong support for," said S&P analyst Kyran Curry.

"This is very important to us."

Moody's sovereign ratings analyst Steven Hess said the Government's individual policies were less important than a path towards a balanced budget or surplus within the next few years.

"We'd be looking for them to maintain that sort of trajectory despite the effect of the earthquakes and the other one-off things that have happened."

While Moody's would not look to alter its rating on New Zealand purely if the return to surplus was a year or so later than previously indicated, "we would want to see a credible plan so it's believable they would get there".

Fitch's Asia sovereign ratings director Art Woo was focused on the medium-term outlook and would try to "look through" shorter term issues but said Fitch would be looking for evidence the Government could get back into surplus by the 2015/2016 target set before the quakes.

- additional reporting NZPA