New Zealand's Prime Minister Jacinda Ardern and her government ministers will take 20 per cent pay cuts because of the economic impacts of the coronavirus pandemic.

Key points: The decision will not affect the country's overall financial position

The decision will not affect the country's overall financial position Ms Ardern said it was a symbolic gesture "about leadership"

Ms Ardern said it was a symbolic gesture "about leadership" She praised New Zealanders for "doing their bit" to stamp out the virus

Ms Ardern said the decision was made in light of the economic challenges New Zealanders were expected to face in the coming months.

The pay cut will be in effect for six months, and applies to government ministers and chief executives of government organisations. It won't apply to any frontline staff like doctors or nurses.

Opposition Leader Simon Bridges has also volunteered to join them in taking the cut.

Ms Ardern said it was a symbolic gesture, and won't have much effect on the country's overall financial position.

New Zealand is currently in a Stage 4 lockdown, one of the strictest globally. ( AP: Mark Baker )

"We feel acutely the struggle that many New Zealanders are facing, and so do the people that I work with on a daily basis," she said.

"It is about leadership ... [There are] so many examples of people showing what others mean to them, and doing their bit in our united fight to stamp out COVID-19, and showing a little bit of kindness along the way.

"If there were ever a time to close the gap between groups of people across New Zealand in different positions, it is now."

Ms Ardern's salary is NZ$471,000 ($446,143), a comparatively high amount for a country with a population of only 5 million people.

For comparison, Australian Prime Minister Scott Morrison has a $549,250 salary.

Asked about Ms Ardern's decision, Treasurer Josh Frydenberg said Australia had frozen pay increases for politicians and public servants.

"That's the action that we've taken," he said.

Treasury modelling released on Tuesday shows unemployment could reach 26 per cent without Government intervention, although the figure is projected to be significantly lower.

New Zealand's government says it can potentially keep unemployment below 10 per cent. ( AP: Mark Baker )

New Zealand's offices, schools and non-essential services have been closed for the past three weeks, with the country experiencing one of the strictest lockdowns globally.

The Government is expected to decide next week whether it will extend that current Stage 4 shutdown, which is the highest ranking on the scale.

If it does so, Treasury has forecast it would increase unemployment to between 17.5 per cent to 26 per cent, from the current 4 per cent.

New Zealand's Finance Minister Grant Robertson said unemployment could be kept below 10 per cent, and return to 5 per cent in 2021, with additional government support.

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