He said current debt was at 1.47 times revenue, within the funding agency's limit of 1.75.
Council chief executive Geoff Williams said the council's financial position was not as good as previously portrayed, but neither was it disastrous.
He said a previous lack of transparency and clarity due to complex reporting meant there was no clear view of the council's overall financial position.
He said the organisation had driven debt higher and quicker than it should have and costs had risen faster than revenue, creating an imbalance between income and spending.
He said the council would also have to reduce capital expenditure, cutting this year's budget from $31 million to about $20 million. He said budgets for this year had been over-optimistic by about $3 million.
Rotorua Mayor Steve Chadwick said she was confident a new financial strategy would get the council on track and ready to deliver on its Rotorua 2030 vision.
"The current financial situation has been identified and will be rectified. We now need to focus on getting things right for this district's future," Mrs Chadwick said.
However, councillor Charles Sturt said someone needed to be held accountable.
"We believed we had all the information in front of us but I always thought there was something not quite right.
"But I was continually shot down in my questioning. We've had an overzealous capital works programme all paid for by debt, but I'm glad this has all come out and am very confident it will be fixed," he said.
Councillor Rob Kent said while initially concerned he was much more comfortable with the council's financial situation and had every confidence in Mr Foster's reporting.
"I'm still pushing very hard to get all of our debt quantified ... and the figures need to be simplified. But I'm comfortable it's not over the top."
Councillors were asked to consider adopting the proposed strategy as part of the upcoming Annual Plan process which will begin early next year.