Government and Fiscal Policy

New Zealand Gross Government Debt

Thursday May 03, 2018 Hugh Dixon

With the 2018 Budget set to be delivered on Thursday 17 May, 2018, one of the hot topics is the amount of additional debt the current Labour-New Zealand Coalition Government will take on to fund its new initiatives, investments and programmes over the coming year.


It is widely tipped that the Government will increase Government debt when the 2018 Budget is delivered.  Given the likelihood of an increase in Government debt, it is important to note the current low levels of Government debt in New Zealand. 


The figure below shows gross Government debt as a percentage of nominal GDP.  Gross Government debt is defined as the total amount of debt a Government owes, including debts between parts of the Government.  For example the New Zealand Super Fund (owned by the Government) may purchase New Zealand Treasury bonds, this would be counted as part of gross Government debt.


According to the New Zealand Treasury, as at June 2017, New Zealand gross Government debt was NZ$87.1 billion or 32.5 percent of GDP.  This means that New Zealand is one of the countries in the OECD with the lowest levels of government debt, when expressed as percentage of GDP.



graph 3 4 19



In 2017, among OECD countries New Zealand had the fifth lowest level of debt, just behind Estonia, Luxembourg, Chile and Turkey, but well ahead of countries like Australia (64.5 percent), United Kingdom (118.3 percent), or United States of America (124.3 percent).  Overall in 2017 the median level of government debt as a percentage of GDP was Finland with 73.3 percent.  The median level of government debt has reduced since 2015 when it was 77.5 percent.