Finance Minister Grant Robertson's budget caused barely a ripple in the financial markets, with the New Zealand dollar remaining unchanged at around US65.2 cents just after its release.

This was despite the Government signalling an increase in bond issuance, higher spending and painting what some saw as an overly optimistic growth outlook.

Government bond yields inched slightly higher shortly after the announcement.

Craigs Investment Partners head of private wealth research Mark Lister said the budget was underwhelming from a financial markets perspective.


"There was not alot it for traders and investors on the day," he said.

"I don't think that we want to see the drama on a budget day like we used to see in the old days," he said.

Budget economic growth forecasts were similar to that in the government's half-year fiscal update, despite a slowing in growth and deteriorating outlook over the last six months.

The Debt Management Office said there would be a $5 billion increase in the Government bond programme compared to the December 2018 Half-Year Update.

Gross issuance is expected to total $42bn over the next five years.

Compared to the Half-Year Update, the bond programme has increased by $2b in 2019/20 and 2020/21, and by $1b in 2021/22.

"The increase in spending plans in today's Budget makes it a little more stimulatory than we expected – though that depends on that spending actually being delivered, in contrast to the persistent spending shortfalls of previous years," Westpac economists said.

"We also believe that there are downside risks to the Treasury's GDP (and hence revenue) forecasts," they said.


The Treasury has actually slightly increased its nominal GDP forecasts in the later years, despite the weaker than expected starting point for the economy.

Ratings agency S&P Global Ratings said the budget supported its strong ratings for New Zealand's local and foreign currency debt but that its forecasts were weaker than it had previously expected due to new spending initiatives aimed at improving residents' wellbeing.

"New spending on health, housing, education, defense, and general welfare will increase core crown expenses by about 1 per cent f GDP per year compared with December's Half-Year Economic And Fiscal Update (HYEFU).

"Based on our definition of the general government budget, which includes local governments, this will delay a return to surplus by one year to fiscal 2023," S&P said.

"We believe there are some downside risks to these projections because of rising global trade tensions, slower domestic and international growth, and weaker inflationary pressures that could weigh on the revenue outlook in the near term," it said.

The forecasts incorporate falling expenses as a percentage of GDP in fiscal years 2022 and 2023 as the government continues major investment in housing, health, education, and infrastructure to improve residents' wellbeing.

"The positive outlook on the long-term ratings on New Zealand reflects our view that the general government budget could return to surplus in the early 2020s," it said.

The government is on track to achieve its net debt-to-GDP target of 20 per cent by fiscal 2022.

S&P said New Zealand's net debt compared favorably with similarly rated peers.