The New Zealand central bank's operating budget will be cut by roughly 25% in the coming fiscal year and set at roughly NZ$150 million ($88.50 million) for each of the next five years, New Zealand's Finance Minister Nicola Willis said on Wednesday.
According to the Reserve Bank of New Zealand funding agreement, the bank will receive total operating expenditure of NZ$750 million ($443 million) for the five year period ending June 30, 2030.
Willis said in a statement the allocation equates to an average annual operating budget of NZ$150 million, down from a budget of NZ$200 million in the current fiscal year.
The total five year operating spending of NZ$750 million is above the previous five year operating budget of NZ$718.8 million. However, the RBNZ's annual report shows that annual spending grew nearly 70% in the four years to June 30, 2024.
The government has allocated capital expenditure of NZ$25.6 million in total for the five years ending June 30, 2030, down from about NZ$29 million in the five year period ending June 30, 2025.
"The new agreement will ensure that the Reserve Bank has adequate resources to fulfil its legal responsibilities while promoting heightened cost efficiency," Willis said.
"Both the board of the Reserve Bank and the Treasury are of the view the new expenditure limits are appropriate."
The conservative government has implemented significant cuts across the public sector since it was elected at the end of 2023, as part of its drive to return the government's accounts to surplus. A cabinet paper released alongside the announcement said the Treasury had reviewed the central bank's funding request of NZ$1.03 billion for the five year period and found it "did not provide good value for money."
The central bank has grown significantly since 2018, with staff numbers nearly doubling to 660 in January this year. This was in part due to the central bank's increased regulatory role and the need for staff to implement various reforms.
Central bank board Chair Neil Quigley said the central bank would work with staff over the coming months to redesign how they work to optimise resources while continuing to deliver on the mandate.
According to the Reserve Bank of New Zealand funding agreement, the bank will receive total operating expenditure of NZ$750 million ($443 million) for the five year period ending June 30, 2030.
Willis said in a statement the allocation equates to an average annual operating budget of NZ$150 million, down from a budget of NZ$200 million in the current fiscal year.
The total five year operating spending of NZ$750 million is above the previous five year operating budget of NZ$718.8 million. However, the RBNZ's annual report shows that annual spending grew nearly 70% in the four years to June 30, 2024.
The government has allocated capital expenditure of NZ$25.6 million in total for the five years ending June 30, 2030, down from about NZ$29 million in the five year period ending June 30, 2025.
"The new agreement will ensure that the Reserve Bank has adequate resources to fulfil its legal responsibilities while promoting heightened cost efficiency," Willis said.
"Both the board of the Reserve Bank and the Treasury are of the view the new expenditure limits are appropriate."
The conservative government has implemented significant cuts across the public sector since it was elected at the end of 2023, as part of its drive to return the government's accounts to surplus. A cabinet paper released alongside the announcement said the Treasury had reviewed the central bank's funding request of NZ$1.03 billion for the five year period and found it "did not provide good value for money."
The central bank has grown significantly since 2018, with staff numbers nearly doubling to 660 in January this year. This was in part due to the central bank's increased regulatory role and the need for staff to implement various reforms.
Central bank board Chair Neil Quigley said the central bank would work with staff over the coming months to redesign how they work to optimise resources while continuing to deliver on the mandate.
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