The Ministry of Foreign Affairs and Trade spent $162 million less on foreign aid in 2024-25 than previously budgeted, according to figures in Budget 2026 estimates.
Development expert Terence Wood described the variance as surprising.
"An awful lot of money to have thought you had spent only to discover it's still in your wallet." — Terence Wood, Australian National University
MFAT said the amount represents a routine carry-forward of unspent funds within the 2024-2027 triennium appropriation. The funds roll forward into later years to align with revised programme plans.
Treasury Risk Advice
Treasury advised Finance Minister Nicola Willis in February 2025 that MFAT carried too many specific fiscal risks to justify new funding. The department recommended reprioritisation, including possible closure of diplomatic posts.
By Budget 2025, annual appropriations for Vote Foreign Affairs had already fallen by approximately $98 million.
MFAT Exempted from Baseline Cuts
MFAT secured an exemption from the 2 percent baseline spending cuts applied to most departments in Budget 2026. This occurred despite the underspend and Treasury risk flags.
Budget 2026 Uplift
Budget 2026 allocated $1.2 billion for foreign aid in 2026/27, $116 million above the prior year. It front-loaded $110 million for Indo-Pacific initiatives over three years. A further $275 million four-year package covers aid and consular services.
ODA Trends
According to OECD preliminary data, New Zealand's official development assistance reached a preliminary USD 780.8 million in 2024, or 0.32 percent of GNI. This marked a rise from 0.31 percent in 2023 and 0.22 percent in 2022. The level remains well below the 0.7 percent UN target.
Climate Finance Risk
According to Treasury, New Zealand's 2022-2025 climate finance commitment totalled $1.3 billion. Treasury flagged a potential $500 million unfunded fiscal risk for future periods. Budget 2026 made no additional provision for subsequent climate targets.
The episode shows challenges in multi-year forecasting for aid amid constrained public finances.
