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Budget 2011 Home Page Budget Economic and Fiscal Update 2011

Uncertainty Around Economic and Fiscal Impacts

There is a high level of uncertainty surrounding both the economic and fiscal impacts of the earthquakes. In terms of impact on the economy, a range of factors could see the effects differ from those built into the Treasury's economic forecasts. These include the quantum and timing of reconstruction activity. With respect to the fiscal impact, there is uncertainty attached both to costs where decisions have already been taken, and to areas where there is either still too much uncertainty or where decisions have not yet been made.

When such costs are committed to, or when they can be reliably measured, they will be recorded in the Crown's financial statements and forecasts and charged against the $3.2 billion of the Fund yet to be allocated. Similarly, costs over and above those already built into the forecasts will be counted against the Fund. To the extent additional costs add to more than the $5.5 billion in the Fund there will be an adverse impact on the fiscal position.

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