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Net Debt

Net debt peaks as a share of GDP in 2014/15...

While the Crown returns to operating surplus in 2014/15, core Crown operating cash flows[7] remain in deficit a further year, not reaching surplus until 2015/16. By 2016/17, the core Crown cash surplus is expected to reach $3.9 billion.

While operating cash flows are positive by 2015/16, net capital spending is expected to exceed these cash flows. As a result, residual cash remains in deficit for each year of the forecast period. These deficits are funded by an increase in net debt. In nominal terms, net debt is expected to peak in 2016/17 at $70.3 billion before beginning to decline. However, net debt peaks as a share of GDP in 2014/15 at 28.7% (Figure 2.11) as the growth in the economy is expected to outpace the increase in net debt.

Figure 2.11 - Net debt
Figure 2.11 - Net debt.
Source: The Treasury

...with residual cash deficits mostly funded by issuing government bonds

Over the next four years residual cash deficits are expected to total $12.7 billion. In order to fund these deficits the bond programme is expected to raise funds of $30.8 billion, with $14.3 billion of existing debt due to be repaid, providing net cash proceeds of $16.5 billion (Table 2.6). The bond programme includes some pre-funding to meet debt maturing just outside the forecast period (December 2017).

Table 2.6 - Net increase in government bonds
Year ending 30 June
Face value of government bonds issued (market) 10.0 8.0 7.0 7.0 32.0

Cash proceeds from government bond issue

Cash proceeds from issue of market bonds 10.2 7.8 6.4 6.4 30.8
Repayment of market bonds (11.0) (1.8) (12.8)
Net proceeds from market bonds 10.2 (3.2) 4.6 6.4 18.0
Repayment of non-market bonds (0.8) (0.7) (1.5)
Net repayment of non-market bonds (0.8) (0.7) (1.5)
Net cash proceeds from bond issuance 9.4 (3.9) 4.6 6.4 16.5

Source: The Treasury

The forecast issuance over the next four years is $2.0 billion lower than was forecast at the Half Year Update, largely owing to the improvement in core Crown tax revenue and core Crown expenses.


  • [7]Net debt and residual cash indicators are measured on a core Crown basis. Residual cash includes both operating and capital activity. This differs from OBEGAL, which is measured at a total Crown level and includes operating activity only.
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