New Zealand Staff Report For The 2011 Article IV Consultation—Informational Annex

New Zealand’s recovery has stalled since mid-2010. Spare capacity has helped contain inflation. The Reserve Bank of New Zealand (RBNZ) lifted its policy rate in two steps from a record low of 2.5 percent to 3 percent in mid-2010. The exchange rate appreciated and financial markets have largely recovered from the global financial crisis. The banking sector remains profitable and is dominated by four subsidiaries of Australian banks that performed well during the crisis. The 2010 Canterbury earthquakes have disrupted economic activity, reduced wealth, and weakened confidence.

Abstract

New Zealand’s recovery has stalled since mid-2010. Spare capacity has helped contain inflation. The Reserve Bank of New Zealand (RBNZ) lifted its policy rate in two steps from a record low of 2.5 percent to 3 percent in mid-2010. The exchange rate appreciated and financial markets have largely recovered from the global financial crisis. The banking sector remains profitable and is dominated by four subsidiaries of Australian banks that performed well during the crisis. The 2010 Canterbury earthquakes have disrupted economic activity, reduced wealth, and weakened confidence.

ANNEX I. FUND RELATIONS

(As of March 31, 2011)

Membership Status

Joined: August 31, 1961; Article VIII

General Resources Account

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SDR Department

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Outstanding Purchases and Loans

None

Financial Arrangements

None

Projected Obligations to Fund:

None

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).

Article IV Consultation

New Zealand is on the 12-month consultation cycle. The 2010 Article IV consultation discussions were held during March 19–29, 2010; the Executive Board discussed the staff report (IMF Country Report No. 10/144) and concluded the consultation on May 12, 2010.

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.

Technical Assistance

None

ANNEX II. STATISTICAL ISSUES

Data provision is adequate for surveillance. The authorities are continuing to enhance data quality and to expand the range of data available, including the recent publication by Statistics New Zealand of institutional accounts that improved household and corporate saving data and a project led by the Reserve Bank of New Zealand to publish data consistent with the Monetary and Financial Statistics Manual 2000. 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. It is recommended that the authorities subscribe to the IMF’s Special Data Dissemination Standard, which would require a production or services index, and present fiscal data in line with the Government Finance Statistics Manual 2001.

Table of Common Indicators Required for Surveillance

As of April 11, 2011

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

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 nonbank 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-à-vis nonresidents.

New Zealand: 2011 Article IV Consultation-Staff Report; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for New Zealand
Author: International Monetary Fund