Finance Minister Bill English says Friday's double downgrade of New Zealand's credit rating is more a reflection of changes in external markets than the country's financial position.
Standards and Poor's has downgraded New Zealand's rating one notch from AA+ to AA, saying the country's' external debt is set to worsen, while Fitch Ratings has lowered the credit rating by one notch to AA, citing the country's rising debt and persistent and widening current account deficits.
Mr English says investors are reassessing their appetite for debt and the credit ratings agencies are taking a tougher stance.
He says New Zealand's financial position has improved over the past few years and the downgrades reflect the change in the global situation.
But the Labour Party's finance spokesperson says the downgrades show the National-led Government has failed to do anything about the country's savings problems and mountain of private debt, from housing.
David Cunliffe says a ratings downgrade was the No 1 issue the Government had said it was trying to avoid because it would add 1% to 2% on everyone's mortgage.
But he says the chickens had now come home to roost: "This is a very, very serious development for New Zealand."
Mr Cunliffe says structural change is needed to deal with the country's debt and savings problems, which is why Labour is taking the political risk of promoting a capital gains tax.
Earlier, the Green Party also placed the blame for the Fitch downgrade on the Government.
Meanwhile, Prime Minister John Key says the indications are that the double ratings downgrade will not have a lot of effect on interest rates because the Government's books are still solid.
Mr Key says problems cited by the agencies, such as high private debt and low exports, are being addressed.
