2 Feb 2012

Government urged to stick to fiscal target

12:06 pm on 2 February 2012

The Treasury is exhorting the Government to stick to its target for returning the Budget to surplus by the 2014-15 fiscal year.

In its briefing to the Minister of Finance after last year's election, which was issued on Thursday, the department says the crisis in Europe continues to dominate the outlook for the world economy.

It says the single biggest step the Government could take to protect New Zealand in the event of the crisis worsening is returning the books to surplus and cutting debt.

The Treasury says more may need to be done to bolster the Government's finances if the world economy deteriorated to such an extent that its credibility with foreign lenders was at risk.

But it says the drive for greater savings would need to be carefully balanced with any negative effects such moves could have on short-term demand within the local economy.