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S&P affirms New Zealand s credit rating
S&P affirms New Zealand's credit rating

Standard & Poor's has affirmed New Zealand's credit rating at AA and has expressed confidence that the government will report a budget surplus as promised in 2015.

The credit rating company notes the burden of earthquake-related expenses on the economy but also says the sale of stakes in state-owned enterprises will be used to fund capital spending.

"We believe the economy has favourable prospects for sustained growth while there remains strong demand for agricultural (dairy, meat, and wood) exports from Australia and emerging Asia - particularly China," S&P said on Friday.

"In our view, the New Zealand economy's overall resilience reflects decades of structural reforms and wage restraint."

New Zealand's public finances had worsened as a result of the global recession and the unavoidable repair and reconstruction costs associated with the Canterbury earthquakes, S&P said.

The government had recorded cash deficits of 8.2 per cent and 7.8 per cent of gross domestic product in 2011 and 2012 respectively.

"Assuming there is no significant weakening in prices and demand for New Zealand's exports, we expect the crown to return its budget balance to a modest surplus in the June 2015 fiscal year," S&P said.

S&P said proceeds from the sale of stakes in state assets over four years would be equivalent to around 3 per cent of GDP in 2011.

The rating affirmation by S&P was welcomed by Finance Minister Bill English.

"New Zealand is one of only nine countries with the highest possible Aaa rating and a stable outlook with Moody's, and it has an AA rating with Fitch," he said.

The S&P rating has a stable outlook.