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.
BUDGET 2020: THE FULL PACKAGE AND WHAT IT MEANS FOR YOU
•Government unveils $50 billion Covid response, wage subsidy scheme extended
• The Budget at a glance
• Wage subsidy scheme extended by 8 weeks, now up to $14b
• Devastated tourism sector gets $400m but details are scarce
• School lunch programme boost to feed 200,000 children every day
• Audrey Young: Robertson's Covid recovery fund has political advantages
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.