Finance Minister Steven Joyce has welcomed the International Monetary Fund’s positive assessment of New Zealand’s economy and its financial system, as contained in two reports released this morning.
“The 2017 IMF report on the New Zealand economy endorses New Zealand’s strong economic plan. It notes New Zealand has enjoyed a solid expansion since 2011, and it expects further solid growth in the near to medium term,” Mr Joyce says.
The report is positive about the country’s economic outlook and endorses New Zealand’s macro-economic and fiscal policy settings.
“The IMF notes that the New Zealand economy is more resilient than in the past, specifically referencing our lower current account deficits than in previous periods of expansion. It also notes that New Zealand is benefiting economically from its current growth in population,” Mr Joyce says.
The IMF also released its Financial System Assessment Programme (FSAP) report on New Zealand this morning.
Mr Joyce welcomed the IMF’s recognition that New Zealand’s financial system is sound and resilient to shocks.
“The IMF assessed New Zealand’s resilience to four key vulnerabilities, the housing market, debt levels in the agricultural sector, the banking system’s dependence on overseas funding, and our ongoing vulnerability to natural disasters. They found New Zealand has the capacity to withstand any adverse events brought on by those risks.
“We will continue to work to increase resilience, through ongoing regulatory actions by the Reserve Bank and the Government’s work to increase housing supply, reduce public debt and prepare for natural disasters.”
“I’m pleased the IMF has recognised the significant progress that New Zealand has made in developing its regulatory system since the last FSAP in 2003/04, including the introduction of a prudential regime for the insurance sector, the creation of the Financial Markets Authority (FMA) and the introduction of the Financial Markets Conduct Act 2013,” Mr Joyce says.
Mr Joyce said both reports highlight the IMF’s view that the biggest area of policy work for New Zealand to complete is in the prudential policy area.
“The Reserve Bank and other agencies have significant work in progress on a number of matters that the IMF raises, including the proposed Debt to Income lending ratios, the Bank’s current review of bank capital requirements, its review of the Insurance (Prudential Supervision) Act, and MBIE’s review of the Financial Advisors Act.
“The IMF acknowledges the progress being made on developing a regulatory framework for Financial Market Infrastructure and the extension of the anti-money laundering regime to other sectors.”
The two reports – the New Zealand 2017 Article IV Consultation Report, and the Financial System Assessment Programme Report – are available here.