When questioned about this, Bill English said it was a good time to borrow because conditions were favourable. The Minister of Finance did however admit that it would put additional pressure on the exchange rate.
Here English attempts to justify his borrowing:
The Council of Trade Unions said "the Government is misleading and scaring people by saying it has to borrow $380 million a week". Now that high level of unnecessary borrowing has come back to bite National in the arse! The NZ Herald reports:
Fitch downgraded New Zealand's foreign currency rating to AA from AA plus and S&P followed up with a cut to its long-term foreign currency ratings on New Zealand to AA from AA plus. S&P also cut its long-term local currency rating on New Zealand to AA plus from AAA.These are the first rating downgrades in 13 years... a double downgrade from Fitch and Standard and Pores specifically because we owe too much. I wonder how much Bill English's borrowing is going to eventually cost us?
Fitch said New Zealand's high net external indebtedness was a key vulnerability, particularly in a global environment that has remained volatile since the ratings were assigned a negative outlook in 2009. Both agencies highlighted New Zealand's current account - which measures the difference between what the country earns from the rest of the world through trade and investment and what the world earns from New Zealand - as a cause for concern.
John Key blames the downgrades on the world's debt crisis and private debt, failing to acknowledge that both agencies have specifically said that it's because New Zealand has a high level of debt (including government debt).
Here Bill English is gloating that there wasn't a downgrade:
Today, Bill English said on Q+A that he wants to get on top of government debt. In my opinion, the best way to do that is to get rid of the current Minister of Finance.
The downgrades simply mean increased repayments on debt. Despite this, English also believes New Zealand will still reach surplus as projected in National's budget... What a plonker!