Budget 2013: Cuts to borrowing a surprise

The NZ Debt Management Office said its total borrowing from government bonds and Treasury bills would be $3 billion lower than outlined. Photo / Getty Images

The financial markets were underwhelmed by the Government's Budget, although a $3 billion cut in its borrowing requirement over the next two years surprised many.

The NZ Debt Management Office (NZDMO) said its total borrowing from government bonds and Treasury bills would be $3 billion lower than outlined in its half year fiscal update last December. The office expects net borrowing of $9 billion in this financial year, a $3 billion reduction next year, and net issuance of $5 billion and $7 billion the following two years.

Westpac chief economist Dominick Stephens said the Government's fiscal position was better than expected: "I thought the NZDMO would just continue to issue bonds at the same rate."

BNZ currency strategist Mike Jones said the Budget was "underwhelming" for the foreign exchange market, which meant the New Zealand dollar remained stationary at US82.5c just after its release.