Govt borrowing $380m a week

Finance Minister Bill English. Photo / Mark Mitchell

The Government is borrowing $380 million a week and next week's budget will carry a record deficit of about $16 billion, Parliament was told today.

Finance Minister Bill English said the Government's financial position had deteriorated "significantly" since late 2008.

"The pre-election update in 2008 forecast that the deficit for this year would be $2.4 billion," he said.

"It's much more likely to be around $15b or $16b."

That level of deficit, as NZPA has previously reported, will be the highest in New Zealand's history and Mr English confirmed that today.

Prime Minister John Key confirmed the average weekly borrowing figure, which he said was unaffordable.

Mr Key said the Government's bond programme for the financial year had been extended to $20b, which was more than was needed, and advantage was being taken of favourable market conditions.

"On a weekly basis that averages out to new debt of $380 a week, that sort of increase in debt is absolutely unaffordable," he said.

Mr English earlier told reporters the cost of the Christchurch earthquake was contributing to the very large deficit.

"I think when people see the budget on May 19 they will realise the Government is actually making great steps towards getting back to surplus and getting the books back in order - I think that will be one of the good news parts of the budget."

Mr English said he believed New Zealanders cared about deficits, realised too much debt was a bad thing, and expected the Government to get its finances under control.

Treasury today released the Government's accounts for the nine months to March 31, showing a deficit of $10.2b compared with a forecast deficit of $8.9b.

Mr English said the Earthquake Commission's costs of $1.5b accounted for most of the difference, but the figures didn't include any further earthquake costs like government support packages or the rescue package for AMI insurance policy holders.

- NZPA