Credit ratings agency Fitch has downgraded New Zealand’s outlook from stable to negative, citing debt reduction concerns.  However, the ratings agency kept the country’s core rating grade at AA+.  “The outlook revision reflects our view that a substantial debt reduction is becoming more difficult to envisage, as fiscal consolidation has been delayed in the past few years”, Fitch wrote.  Fiscal consolidation is a term used to describe getting back to surplus and reducing the debt ratio.  The general Government debt-GDP ratio had increased substantially over the last six years as the economy was buffeted by a number of shocks, Fitch wrote.  But the AA+ rating reflected New Zealand’s “advanced and wealthy economy, high governance standards, and robust policy framework”.  “These strengths are balanced by the economy’s vulnerability to external shocks given its size and openness, an elevated current account deficit, and high household debt.”  The Government's committed to achieving its three fiscal goals – reducing spending as a proportion of GDP, returning the headline operating balance measure to surplus and bending the debt curve down, Finance Minister Nicola Willis says. Photo / Mark Mitchell  Fitch’s decision to put New Zealand’s AA+ long-term credit rating on negative outlook was a reminder why fiscal discipline was so important, Finance Minister Nicola Willis said.  Global economic volatility made the Government’s programme of fiscal consolidation more important than ever, Willis said in a statement this morning.  “Over the past two years, this Government has pursued a balanced fiscal strategy – lifting investment in frontline services like health, education, and law and order, while charting a credible path back to surplus.  “That has required hard decisions: $43 billion of savings across the last two Budgets, with further savings planned in Budget 2026.”  The Government was committed to achieving its three fiscal goals – reducing spending as a proportion of GDP, returning the headline operating balance measure to surplus and bending the debt curve down, Willis said.  “Treasury’s preliminary economic forecasts – prepared before the latest volatility in the Middle East – showed New Zealand’s economic recovery gaining momentum, with growth of around 3% by early 2027 and a corresponding improvement in revenue that would support a more positive fiscal outlook.”  Those forecasts would now need to be revised, she said.  “Energy market disruption adds real uncertainty, and that is precisely why careless spending is off the table.”  New Zealand's debt levels influenced Fitch's latest rating and outlook.  One of its key rating drivers for New Zealand was delayed debt decline, Fitch wrote.  “We forecast general government gross debt to rise to 56% of GDP in the fiscal year ending June 2027 (FY27) from 53.6% in FY25, and to only return to the FY25 ratio in FY30.  “This would be well above the outer year (FY27) forecast of 36.1% when we upgraded New Zealand in September 2022. The debt reduction will be driven by a large 2.8pp of GDP improvement in the primary balance by FY30.”  The authorities projected the net core crown debt-to-GDP ratio to reach 46.9% of GDP by FY29, above the 45.5% projection at the May 2025 fiscal update, they wrote.  Another rating driver was that fiscal consolidation had been further delayed.  The December 2025 fiscal update forecast that the Government’s key fiscal metric – operating balance before gains and losses excluding revenue and expenses of the Accident Compensation Corporation (OBEGALx) – would return to surplus in FY30, one year later than in the May 2025 fiscal update.  “This follows repeated delays in the target year since December 2022 under successive governments.”  The delays were because of weak economic growth since then and more persistent expenditure than anticipated...