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Government sets new debt reduction target

NZ Newswire logoNZ Newswire 27/04/2017

The government has set a new debt reduction target - it wants to get it down to between 10 per cent and 15 per cent of GDP by 2025. © Getty Images The government has set a new debt reduction target - it wants to get it down to between 10 per cent and 15 per cent of GDP by 2025. The government has set a new debt reduction target - it wants to get it down to between 10 per cent and 15 per cent of GDP by 2025.

The current target is reducing it to 20 per cent by 2020, and Finance Minister Steven Joyce says "great progress" is being made.

"Now it's time to set a new target for net debt out to the middle of the next decade," he said in a pre-budget speech on Thursday.

"It helps to provide capacity to absorb future shocks - we have learnt from the Global Financial Crisis and the Canterbury earthquakes that shocks can come along at any time, and sometimes they come in pairs."

Mr Joyce said the government borrowed the equivalent of 20 per cent of GDP after the financial crisis so the most vulnerable people could be supported through it.

"It was the right thing to do," he said.

"It allowed us to spread the cost of both events and allowed the economy to recover without extra taxes and without slashing entitlements - as was variously recommended by critics on the left and the right."

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