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Sagarika Chandra: Fitch analyst reveals why the agency changed New Zealand's rating · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks ed B.
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  Speaker 1: Follow this and our wide range of podcasts now on iHeartRadio. Now.
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  Speaker 2: New Zealand's credit rating out look took a hit over
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  Speaker 2: the weekend. Fitch revised our long term outlook from stable
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  Speaker 2: to negative. We get to keep the double A plus
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  Speaker 2: rating for now. The problem, though, is our national debt
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  Speaker 2: is high and it's not coming down. Sagaurika Chandra is
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  Speaker 2: Fitch's primary rating our analyst and with us now, Hi, Sagarika.
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  Speaker 3: Hi, what with having mischel?
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  Speaker 2: Yeah, look, thank you for joining us. What would you
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  Speaker 2: like to see for us to avoid what comes next,
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  Speaker 2: which is a rating downgrade?
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  Speaker 3: Yes, So the outlook provision has been primarily been based
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  Speaker 3: on a somewhat steady delay in the fiscal consolidation part
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  Speaker 3: of the government. So now we're seeing that in our
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  Speaker 3: baseline a substantial debt production is becoming harder to to
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  Speaker 3: envisat over over our forecast period, and that is that
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  Speaker 3: is being backed by what we are seeing as a
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  Speaker 3: somewhat delayed economic recovery, and some of the expenditure commitments
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  Speaker 3: of the government are being are harder to to roll
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  Speaker 3: back and the spending is more persistent. So for us
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  Speaker 3: too to revise the outlook back two stables, I think
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  Speaker 3: what we would be looking for is a greater confidence
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  Speaker 3: in in our own assessment of the authorities ability to
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  Speaker 3: to consolidate and stay on that path. So there has
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  Speaker 3: been a delay in the return to two surplus uh
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  Speaker 3: persistently that we have been seeing in in successive budgets.
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  Speaker 3: And even though some of the physical outlook out turns
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  Speaker 3: have been somewhat better than what authorities were projecting, the
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  Speaker 3: return to surplace has been extended by say one year,
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  Speaker 3: every year by a year. So I think what we
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  Speaker 3: would be we would be looking for is is just
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  Speaker 3: increase confidence that they will be able to reduce their
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  Speaker 3: their debt numbers substantially and stay committed on the path
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  Speaker 3: of physcal consolidation. So a somewhat increasing track record of
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  Speaker 3: fiscal discipline and sticking to the targets that have been
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  Speaker 3: outlined in their budgets.
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  Speaker 2: Okay, so how long do you leave it before you know?
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  Speaker 2: In order for this is a warning shot? Right, So
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  Speaker 2: how long do you leave it after the warning shot
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  Speaker 2: before you actually downgrade the rating if you don't see
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  Speaker 2: things turn around?
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  Speaker 3: Yeah, So our ratings and outlook. The assignment of the
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  Speaker 3: rating and the outlook is is typically for a period
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  Speaker 3: of eighteen to twenty four months. However, we do continue
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  Speaker 3: to monitor development.
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  Speaker 2: Oh, I think we've I think the Chinese spies have
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  Speaker 2: cut us off. That That is the end of that
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  Speaker 2: phone call to Hong Kong. Sagrika, Thank you very much.
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  Speaker 2: Sagarrika Chandra, who is Fitch's primary rating analyst.
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