In a statement released late Friday, Fitch Ratings cut the Outlook on New Zealand's (NZ) Long-Term Foreign-Currency Issuer Default Rating (IDR) to Negative from Stable and affirmed the IDR at 'AA+'.

Key takeaways

A substantial debt reduction is becoming more difficult to envisage, as fiscal consolidation has been delayed in the past few years.

The general government debt-GDP ratio has increased substantially over the past six years as the economy has been buffeted by a number of shocks.

Significant fiscal consolidation measures are likely to occur only after the ​2026 election, adding uncertainty to the fiscal outlook.

The Iran ​war poses risks to the country's economy, given its dependence on ​energy imports.

NZ Finance Minister ​Nicola Willis said ​in a statement ⁠that the negative outlook is a reminder of why fiscal discipline is important.

“The Government remains committed ​to achieving its three fiscal goals – reducing spending ​as ⁠a proportion of GDP, returning the headline operating balance measure to surplus and bending the debt curve down," she said.