NEW ZEALAND BUDGET FORECAST SEEN AS POSITIVE
  Analysts said they were surprised at
  the government's announcement of a forecast budget surplus for
  fiscal 1988 but said it was consistent with previous policy
  statements and positive for the economy.
      Finance Minister Roger Douglas predicted a budget surplus
  for the year ending March 1988 of 379 mln New Zealand dlrs
  against a 1.95 billion deficit last year.
      Analysts polled by Reuters said the forecast budget surplus
  was even more positive than the most bullish analysts'
  forecasts and that this was good news for financial markets.
      Market expectations among analysts questioned by Reuters
  before the budget varied widely between a balanced budget and a
  2.3 billion dlr deficit. But none predicted a surplus.
      The forecast initially looks positive for both the bond and
  the foreign exchange markets, one analyst said. Paradoxically,
  the New Zealand dollar could rise in the medium term, despite
  lower interest rates, as overseas investors became more
  confident about investing in New Zealand, he said.
      However, some foreign exchange dealers disagreed, saying
  the local dollar is primarily interest rate driven and will
  move lower.
      The local dollar dropped to 0.5940/50 U.S. Dlrs in after
  hours trading, against 0.5970/77 just before the budget
  release.
      Analysts said the budget was also positive for the share
  market, despite an increase in the contribution of company
  taxation to revenue figures.
      One equities analyst predicted that the budget surplus
  announcement could push the share market up by 50 points
  tomorrow.
      The Budget statement was broadly as expected, with a
  continuation of existing policies, and the absence of
  traditional pre-election incentives would be viewed positively
  by overseas investors, another said.
      But one merchant bank economist said that certain anti-tax
  avoidance measures could damage some sectors of the share
  market, particularly multi-national companies.
      The government is also lowering its borrowing requirements,
  through bond tenders, as a result of the surplus. The
  requirement for the rest of the year is now down to 950 mln
  N.Z. Dlrs from a predicted 1.75 billion.
      Predicted revenue in the Budget looked sustainable and
  there appeared to be no holding back on expenditure, another
  economist said. He added that the document seemed entirely
  credible.
      "Altogether it looks good for Labour's election prospects,"
  he said.
      An election is due before the end of September.
  

