Tax increases appear unlikely, but some spending restraint is possible in the upcoming New Zealand budget, as a restraint could reduce inflation pressure, limit debt growth, and lower downgrade risk, ANZ Research said in a Tuesday report.
ANZ noted that previous estimates suggested oil-shock impacts could add NZ$10 billion in debt issuance by 2030, while weaker growth forecasts now lift that estimate to NZ$15 billion, but cutting budget allowances by NZ$1 billion per year could reduce the increase to about NZ$5 billion.
The bank believes that budget 2026 will be challenging as the government balances economic support, inflation risks, and debt sustainability.