Commentary on the Financial Statements
Introduction
The Government's fiscal strategy (outlined in more detail in the 2007 Fiscal Strategy Report) is to strengthen its fiscal position so that it is well placed to respond to future challenges such as those associated with population ageing. The strategy is summarised in Figure 1.
The Government intends to implement this strategy primarily by building up financial assets in the New Zealand Superannuation (NZS) Fund and maintaining gross debt at around 20% of GDP. In order to keep debt stable, the Government has said that it intends to run its core cash position so that core borrowing tracks in line with GDP over time. In practice, this means running operating surpluses sufficient to cover the contributions to the NZS Fund and some other capital spending needs.
The Financial Statements of the Government provide a record of the Government's financial performance over the 2006/07 financial year and its financial position as at 30 June 2007. They provide a comparison with the fiscal forecasts in the 2007 Budget Economic and Fiscal Update and with the 2005/06 financial statements. These Financial Statements will be the last set prepared on a current GAAP basis, with future reporting being on an NZ IFRS basis. They also provide the public with a snapshot of the progress the Government has made in implementing its fiscal strategy, as set out in the Short Term Fiscal Intentions and Long Term Objectives of the Fiscal Strategy Report.
- Figure 1 - Fiscal strategy at a glance
