Local Government Minister Simon Watts.
Photo: SAMUEL RILLSTONE / RNZ
The Fitch credit ratings agency is warning the introduction of local government rate caps could increase the risk of credit downgrades across the sector.
The government is planning to introduce legislation this year that will eventually limit council rate increases to 4 percent, from 2029.
Fitch reviews the credit ratings of 18 councils across New Zealand.
Paul Norris, senior director at Fitch Ratings, said they had generally held a positive view of the sector, given the flexibility councils have had to raise revenue.
He said it was early days and some councils may yet be able to get exemptions from rate caps.
However, he said overall he probably expected it to weigh on credit profiles across the sector.
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