MNI INTERVIEW: RBNZ Bond Buys Unlikely, Never Say Never-FinMin

--'V-ish' Recovery Likely For New Zealand, But Global Risks

--No Further Government Stimulus Being Considered

By Lachlan Colquhoun

     SYDNEY (MNI) - New Zealand's government is unlikely to need to sell bonds

directly to the Reserve Bank as investor appetite remains strong and bond

markets liquid after a brief hiccough in March, although the option should

always remain, Finance Minister Grant Robertson told MNI, anticipating a "V-ish"

shaped recovery.

     Despite debt being set to increase by NZ$133 billion more than previously

planned in the period up to 2024, Robertson does not believe it will be

necessary for the RBNZ to either purchase bonds directly, or buy more than 50%

of issued government debt.

     However, he declined to rule out direct purchases by the RBNZ at some

point. "Both the government and the Bank have said 'never say never' and these

are tools and they remain available to us."

     Robertson said confidence in the country would hold and its bonds would

continue to be in global demand among global investors.

     --STIMULUS

     As previous governments have been fiscally prudent, public finances are in

a good position, as underlined recently by Standard & Poor's, which reaffirmed

NZ's AA rating, and Moody's which confirmed a positive outlook, he said.

     Looking ahead, Robertson noted plenty of allocation room left in the recent

NZD50 billion package and no further fiscal stimulus was being considered.

     The reserved funds could be used to extend current wage support programs,

although they may be changed to target more vulnerable industries, he said.

     "We want to avoid falling off cliff faces, and as we transition from one

form of fiscal support to another we have to bring business along with us,"

Robertson said.

     --TRADE BOUNCE

     With lockdowns easing in New Zealand and the economy beginning to open,

Robertson believed the recovery would be "V-ish" but accepted that as a small

economy, global conditions would be a driving force.

     Robertson said New Zealand would look for new export opportunities with

other regional economies as a key part of its recovery from Covid-19 disruption

     "During the lockdown period we have done quite a lot of work with Singapore

around complimentary trade opportunities, and we are also looking toward other

countries in our region which have come through Covid well," said Robertson,

adding Wellington would like to switch into high-end manufacturing and services,

reducing its dependency on tourism.

     Exports will be a focus for the recovery as other main drivers of recent

economic growth -- migration, a strong housing market and the tourism industry

-- faced post-Covid challenges.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

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