Staff Report for the 2010 Article IV Consultation—Informational Annex

New Zealand rode out the global crisis better than most advanced economies, thanks to strong demand from fast-growing Asian markets and the robust Australian economy, a flexible exchange rate, the absence of a banking crisis, and significant and effective policy easing. This 2010 Article IV Consultation highlights that a gradual recovery is expected to continue, with growth projected at 3 percent in 2010–11. The outlook is subject to downside risks related to the pace of global recovery and borrowing costs for countries with high external debt, such as New Zealand.

Abstract

New Zealand rode out the global crisis better than most advanced economies, thanks to strong demand from fast-growing Asian markets and the robust Australian economy, a flexible exchange rate, the absence of a banking crisis, and significant and effective policy easing. This 2010 Article IV Consultation highlights that a gradual recovery is expected to continue, with growth projected at 3 percent in 2010–11. The outlook is subject to downside risks related to the pace of global recovery and borrowing costs for countries with high external debt, such as New Zealand.

Annex I. New Zealand: Fund Relations

(As of March 31, 2010)

I. Membership Status: Joined: August 31, 1961; Article VIII

II. General Resources Account:

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III. SDR Department:

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IV. Outstanding Purchases and Loans: None

V. Financial Arrangements: None

VI. Projected Obligations to Fund: None

VII. Exchange Arrangement:

New Zealand accepted the obligations of Article VIII on August 5, 1982. The New Zealand dollar has floated independently since March 1985 and the de facto exchange rate arrangement is free floating. New Zealand maintains an exchange system that is free of restrictions on the making of payments and transfers for current international transactions, other than restrictions notified to the Fund in accordance with Decision No. 144-(52/51).

VIII. Article IV Consultation:

New Zealand is on the 12-month consultation cycle. The 2009 Article IV consultation discussions were held during March 13-23, 2009; the Executive Board discussed the staff report (IMF Country Report No. 09/145) and concluded the consultation on May 6, 2009.

IX. FSAP Participation and ROSCs:

FSAP mission took place during October 30-November 18, 2003. The FSSA and the Detailed Assessments of Observance of IOSCO Objectives and Principles of Securities Regulation and FATF Recommendations for Anti-Money Laundering and Combating the Financing of Terrorism were published under Country Reports No. 04/126, No. 04/417, and No. 05/284, respectively.

x. Technical Assistance: None

XI. Resident Representative/Advisor: None

Annex II. New Zealand: Statistical Issues

Data provision is adequate for surveillance. The authorities are continuing to enhance data quality and expand the range of data available, including a project led by the Reserve Bank of New Zealand to publish data consistent with the Monetary and Financial Statistics Manual2000 (MFSM2000). Given New Zealand’s high level of external indebtedness, the publication of up to date institutional sector and flow of funds accounts would be an important addition to the current suite of statistics.

Table of Common Indicators Required for Surveillance

(As of April 14, 2010)

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Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market-based and officially determined, including discount rates, money market rates, rates on treasury bills, notes, and bonds.

Foreign, domestic bank, and domestic non-bank financing.

The general government consists of the central government (including budgetary, extra budgetary, and social security funds) and state and local governments.

Including currency and maturity composition.

Includes external gross financial asset and liability positions vis-a-vis nonresidents.

Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A), Irregular (I); Not Available (NA).

New Zealand: 2010 Article IV Consultation: Staff Report; and Public Information Notice on the Executive Board Discussion
Author: International Monetary Fund