By Praveen Menon WELLINGTON, May 20 (Reuters) - New Zealand on Thursday significantly lifted welfare benefit rates and promised billions of dollars towards addressing long-term challenges in its 2021 budget, while forecasting a stronger than expected economic recovery from the COVID-19 pandemic. The budget for the 2021 fiscal year allocated funds towards housing, healthcare, education and infrastructure, while also targeting issues like child poverty, climate change and welfare of the indigenous Maori. The highlight, however, was a hike in the weekly benefit rates by up to NZ$55 per adult, which the government said was the largest income increase in a generation. "Not only will this give a sense of dignity and hope to those who receive that boost in income, it will also help reduce inequality and provide ongoing stimulus to the economy," New Zealand Finance Minister Grant Robertson said.