New Zealand Finance Minister Grant Robertson announced the Budget 2021 on Thursday, giving thrust to spending and in bringing the economy back to pre-COVID levels.

“This year’s Budget is still in the shadow of COVID-19, and its focus is to secure our recovery from its impact,” Robertson said in his speech.

The economy is forecast to grow 2.9 percent this year. Growth is seen accelerating to 3.2 percent next year and 4.4 percent in 2023.

The improved labor market outlook and strength in economic activity suggest that the long term effects of the pandemic will not be as severe as previously thought, Robertson said.

The minister said unemployment is set to fall back to 4.2 percent and an extra 200,000 people will enter employment over the next four years.

The operating balance before gains and losses, or OBEGAL, deficit was forecast to be at nearly NZ$30 billion from 2020 to 2022 and net debt was forecast to rise to near 55 percent of GDP in 2023.

The OBEGAL is projected to be in surplus from 2026/27 – roughly the same time the previous government took to get to surplus following the Global Financial Crisis.

The government has boosted welfare spending. The weekly benefit rates will be raised between NZ$32 and NZ$55 per adult. Student support payments, both for allowances and loans, will increase by NZ$25 per week from April 1 next year as well.

The multi-year capital infrastructure spending was raised to NZ$12 billion from NZ$8 billion.

The government’s book is likely to improve at a considerably faster pace than the Treasury expects, Michael Gordon and Nathan Penny, economists at Westpac, said. As that becomes apparent, there will be scope for both more substantial spending plans and faster debt reduction.

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