Debt
Gross Sovereign Issued Debt (GSID) Excluding Settlement Cash
GSID (excluding Settlement Cash) represents the debt issued by the sovereign (ie, core Crown) and includes Government stock held by the NZS Fund, ACC and EQC but excludes money deposited with the Reserve Bank by banks (Settlement Cash).
Gross debt falls as a percentage of GDP …
Although GSID (excluding Settlement Cash) increases over the forecast period from $30.6 billion in 2006/07 to $35.5 billion by 2011/12 it falls as a percentage of GDP from 18.2% to 16.8% over the same period.
The $4.9 billion nominal increase in GSID (excluding Settlement Cash) is primarily due to the net bond issuance of $6.4 billion (Table 2.13); partially offset by a $1.5 billion decrease in other core Crown financial liabilities such as Treasury bills.
| Year ended 30 June | 2008 | 2009 | 2010 | 2011 | 2012 | |
|---|---|---|---|---|---|---|
| $ million | Forecast | Forecast | Forecast | Forecast | Forecast | Total |
| Issue of domestic bonds (market) | 2,415 | 3,314 | 3,393 | 3,394 | 3,365 | 15,881 |
| Repayment of domestic bonds (market) | - | (2,700) | (3,947) | - | (3,976) | (10,623) |
| Net increase in domestic bonds (market) | 2,415 | 614 | (554) | 3,394 | (611) | 5,258 |
| Issue of domestic bonds (non-market) | 189 | 662 | 851 | 245 | 1,286 | 3,233 |
| Repayment of domestic bonds (non-market) | - | (451) | (599) | - | (1,046) | (2,096) |
| Net increase in domestic bonds (non-market)3 | 189 | 211 | 252 | 245 | 240 | 1,137 |
| Net bond issuance | 2,604 | 825 | (302) | 3,639 | (371) | 6,395 |
Source: The Treasury
| Year ended 30 June | 2008 | 2009 | 2010 | 2011 | 2012 |
|---|---|---|---|---|---|
| $ million | Forecast | Forecast | Forecast | Forecast | Forecast |
| GSID (excluding Settlement Cash) | |||||
| Half Year Update | 33,303 | 33,034 | 31,779 | 34,566 | 33,172 |
| Domestic bonds (market) | (38) | 817 | 1,753 | 2,640 | 3,508 |
| Domestic bonds (non-market) | (30) | (37) | (16) | (17) | (28) |
| Reduction in treasury bills | (1,387) | (1,289) | (1,289) | (1,289) | (1,289) |
| Movements in other financial liabilities | (85) | (27) | 24 | 74 | 136 |
| (1,540) | (536) | 472 | 1,408 | 2,327 | |
| Budget Update | 31,763 | 32,498 | 32,251 | 35,974 | 35,499 |
Source: The Treasury
Net Core Crown Debt
Net core Crown debt equates to core Crown borrowings less core Crown financial assets (excluding the financial assets of the NZS Fund).
By deducting financial assets (excluding the NZS Fund), net debt can provide additional information about the sustainability of the Government's accounts. However, it is important to view net debt alongside GSID (excluding Settlement Cash) as some financial assets are not very easily converted to cash.
Net debt increases …
Net debt rises from $1.9 billion in 2007/08 to $13.2 billion by 2011/12 (from 1.0% to 6.2% as a percentage of GDP).
… as financial assets fall …
Net debt increases as a result of cash deficits of almost $13 billion over the forecast period. Funding of these deficits is met through a combination of domestic bond issuance and a reduction in the financial assets which have been built up by the New Zealand Debt Management Office (NZDMO) over the past few years.
Financial assets of the NZS Fund are excluded from the calculation of net debt as they are set aside to partially pre-fund the future cost of New Zealand Superannuation.
| Year ended 30 June | 2008 | 2009 | 2010 | 2011 | 2012 |
|---|---|---|---|---|---|
| $ million | Forecast | Forecast | Forecast | Forecast | Forecast |
| Net core Crown debt | |||||
| Half Year Update | 1,983 | 1,756 | 1,705 | 1,792 | 2,105 |
| Core Crown residual cash impact | (149) | 2,566 | 5,089 | 7,685 | 10,205 |
| Valuation of financial instruments | 181 | 438 | 386 | 558 | 659 |
| Other items | (169) | (182) | 92 | 110 | 224 |
| Total net debt impact | (137) | 2,822 | 5,567 | 8,353 | 11,088 |
| Budget Update | 1,846 | 4,578 | 7,272 | 10,145 | 13,193 |
Source: The Treasury
Notes
- [3]Non-market domestic bonds are bonds held by the Earthquake Commission.
