The New Zealand Government is selling the 2024 Budget as being “fiscally responsible” and doing what they promised to do.
Treasury argues that fiscal policy is tightening over the coming four years and that “decisions taken through Budget 2024 will on balance reduce the contribution fiscal policy is making to inflation pressure”. In fact, Treasury forecasts a noticeably faster decline in CPI inflation this year than the RBNZ recently published.
But this conclusion relies rather heavily on the assumption that in future Budgets the Government will stick to large reductions in allowances for new spending and will be able to achieve the significant savings measures outlined in the Budget.
NZ Treasury says there are hard choices ahead.
