New Zealand's Finance Minister Nicola Willis presented the government's Budget 2026, outlining key financial projections and policy measures. The government forecasts GDP growth of 2.3% for 2026/27, which is lower than the previous HYEFU forecast of 3.4% [1]. The operating balance before gains and losses (OBEGAL) is expected to be a deficit of NZ$-14.09 billion in 2026/27, compared to the previous forecast of NZ$-12.99 billion [1]. For 2025/26, the OBEGAL deficit is projected at NZ$-15.06 billion, an improvement from the earlier estimate of NZ$-16.93 billion [1]. The cash balance for 2025/26 is forecast at NZ$-9.31 billion, better than the previous NZ$-14.80 billion projection [1]. Net debt is expected to reach 42.4% of GDP in 2025/26, slightly lower than the prior forecast of 43.3% [1]. The government anticipates returning to an OBEGAL surplus in 2029/2030 [1].
The New Zealand Treasury expects inflation to peak at 4.0% in Q2 2026 [1]. The New Zealand Debt Management Office (DMO) plans to issue NZ$34 billion in bonds for 2026/27, unchanged from the December forecast, and has reduced its planned gross bond issuance for the four years to June 30, 2030, to NZ$124 billion from NZ$130 billion [1].
A new prudential levy will be introduced on banks, non-bank deposit takers, insurers, and other financial market participants, aiming to recover around NZ$209 million over the next four years [1].
In terms of market reaction, the NZD/USD currency pair was trading around 0.5900, up 0.02% on the day at the time of reporting [1].
CONCLUSION
New Zealand's 2026 Budget projects slower GDP growth and persistent deficits, with a return to surplus not expected until 2029/2030. The introduction of a prudential levy and stable bond issuance plans reflect efforts to manage fiscal challenges. The market response was muted, with the NZD/USD pair showing only a slight increase.