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Debt

Gross Sovereign Issued Debt (GSID) Excluding Settlement Cash

Figure 2.11 – GSID (excluding Settlement Cash)
Figure 2.11			– GSID (excluding Settlement Cash).
Source: The Treasury

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.

Table 2.13 – Net increase in domestic bonds[3]
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

Table 2.14 - GSID (excluding Settlement Cash) comparison to the Half Year Update
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

Figure 2.12 – Net core Crown debt
Figure 2.12 – Net core Crown debt.
Source: The Treasury

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.

Figure 2.13 – DMO/RB financial assets (excluding Settlement Cash impact)
Figure 2.13 – DMO/RB financial assets (excluding Settlement Cash impact).
Source: The Treasury

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.

Table 2.15 - Net core Crown debt comparison to the Half Year Update
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.
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