New Zealand could go bankrupt within next 5 years, markets believe

Here's a little snippet from a Reuters story this week on Credit Default Swap (CDS) spreads on sovereign (government) debt. 

New Zealand's 5-year CDS rose to 215.2 bps from 206.3 bps, putting the island with a 17 percent risk of default within five years.  

This essentially says that many people in the international markets believe New Zealand's current account deficit problem and its burgeoning budget mean there's a reasonable chance New Zealand will go bankrupt. Let's hope they're wrong, but it's something Finance Minister Bill English will look at hard as he prepares the budget. I think we can't afford the tax cuts or the continued contribution to the NZ Super Fund, and some serious pruning of government spending and benefits is necessary. Your thoughts?