New Zealand: Staff Report for the 2013 Article IV Consultation—Informational Annex

New Zealand’s economy continued to grow at a moderate rate, in part reflecting the effects of the recent drought and inflation. The macroeconomic policy has been framed to absorb adverse shocks with flexible exchange rates to serve as buffer. The planned pace of deficit reduction is balanced between sustaining aggregate demand and limiting public debt growth. Recent stress tests also showed that major banks could withstand a sizable shock to output, terms of trade, rising unemployment, and a fall in property prices.

Abstract

New Zealand’s economy continued to grow at a moderate rate, in part reflecting the effects of the recent drought and inflation. The macroeconomic policy has been framed to absorb adverse shocks with flexible exchange rates to serve as buffer. The planned pace of deficit reduction is balanced between sustaining aggregate demand and limiting public debt growth. Recent stress tests also showed that major banks could withstand a sizable shock to output, terms of trade, rising unemployment, and a fall in property prices.

Fund Relations

(As of March 31, 2013)

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 Payments to Fund 1/

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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. On June 6, 2012, the Executive board concluded the Article IV consultation with New Zealand and considered, and endorsed, the staff appraisal without meeting, on a lapse-of-time basis.

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

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 Manual 2000 (MFSM 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.

Table of Common Indicators Required for Surveillance

(As of April 22, 2013)

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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-à-vis nonresidents.

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