WELLINGTON (Reuters) - New Zealand acting Prime Minister Bill English said on Monday it could take until the end of the week to confirm the country's next government following an inconclusive election last month.
The country has been in political limbo since Sept. 23 when neither the National Party, which has led the government since 2008, or the Labour Party, won enough seats to form a government.
That left the nationalist New Zealand First Party in a position to determine the next government and leader Winston Peters spent five days last week holding negotiations with both major parties.
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English, who heads the National Party told Radio New Zealand there were a number of issues still to be worked out, including ministerial appointments. He said his staff were going back and forth with NZ First on policy issues over the weekend.
"While New Zealand First are having a discussion today they won't be dealing with completed agreements because there's still outstanding issues," English said.
When asked whether he anticipated a confirmed government by the end of the week, English replied: "I would expect so, yes".
Peters was meeting with his party's board on Monday. He has said the board must meet before a final decision can be made.
Peters also told local radio there would be an agreement by the end of the week, but did not want to "put a time on it".
He had originally expected to reach a decision by Oct. 12.
The political uncertainty has knocked 2.2 percent off the New Zealand dollar since the vote last month and recent surveys have shown it is weighing on business sentiment and economic activity.
Growth in New Zealand's services sector slipped in September as the inconclusive election hit sales activity, a survey showed on Monday.
Labour leader Jacinda Ardern on Saturday released a video on YouTube in which she defended the process dragging on.
"If you're going to form a government, of course you need to understand one another's policy positions, where you have consensus and the kind of government you want to form ... It's only natural that that would take a little bit of time," she said.
NZ First's policies are more aligned with those of Labour - both favor curbing immigration and foreign ownership, renegotiating certain trade deals and changes to the central bank's approach to monetary policy.
But observers have said that a two-way coalition is much simpler to put together than one involving three parties. The Greens and Labour would have to get together for the left-wing parties to form a government.
(Reporting by Charlotte Greenfield and Ana Nicolaci da Costa; Editing by Jane Merriman and Michael Perry)