The Treasury

Global Navigation

Personal tools

Debt

Table 12 - Net debt[2] and Gross debt[3]
Year ended 30 June Actual
2006 		Actual
2007 		Actual
2008 		Actual
2009 		Actual
2010 		Actual
2011 		Forecast
30 June 2011
Budget 10 Budget 11
Net debt ($m) 16,163 13,380 10,258 17,119 26,738 40,128 39,965 41,502
Net debt (% GDP) 10.0% 7.8% 5.6% 9.2% 14.1% 20.0% 19.6% 20.8%
Gross debt ($m) 33,903 30,647 31,390 43,356 53,591 72,420 66,969 71,578
Gross debt (% GDP) 20.9% 17.8% 17.1% 23.4% 28.3% 36.2% 32.8% 35.8%
Figure 11 - Net debt
Figure 11 - Net debt.
Source: The Treasury

Net Debt

Net debt increases as a result of cash deficits and declines as a result of cash surpluses. It also fluctuates in line with valuation movements in the underlying financial assets and liabilities of the Crown and movements in the amounts of currency issued to New Zealand banks.

The $13.4 billion increase in net debt over the year (figure 11) was primarily due to additional borrowings and a run-down of assets to meet the residual cash deficit of $13.3 billion recorded this year (refer table 13).

Table 13 - Movement in net debt
Year ended 30 June Actual
2006 		Actual
2007 		Actual
2008 		Actual
2009 		Actual
2010 		Actual
2011 		Forecast
30 June 2011
$ million Budget 10 Budget 11
Opening net debt 19,879 16,163 13,380 10,258 17,119 26,738 26,642 26,738
Net core Crown cash flow from operations (8,859) (8,586) (7,292) 1,967 4,991 9,285 8,339 10,551
Contributions to NZS Fund 2,337 2,048 2,104 2,243 250 - - -
Purchase of physical assets 1,826 1,755 1,433 1,625 1,778 1,524 2,240 1,786
Advances and capital injections 1,711 1,990 1,698 2,804 1,981 2,534 2,748 2,614
Core Crown residual cash (surplus)/deficit (2,985) (2,793) (2,057) 8,639 9,000 13,343 13,327 14,951
Movements in circulating currency (165) (81) (86) (475) (15) (234) (181) (34)
Other valuation changes in financial assets and financial liabilities (566) 91 (979) (1,303) 634 281 177 (153)
Closing net debt 16,163 13,380 10,258 17,119 26,738 40,128 39,965 41,502

The residual cash deficit was $1.6 billion lower than forecast and $4.3 billion larger than last year.

Table 14 summarises the movement in residual cash over the year. Specifically:

  • Core Crown tax receipts were $0.8 billion higher than last year consistent with the increase in core Crown tax revenue.
  • Benefit payments have increased by $0.6 billion in line with the increase in benefit expenses.
  • While core Crown expenses have increased by $6.4 billion, other operating cash payments have only increased by $4.5 billion. This is due to a number of these increases not having an immediate cash impact (eg, earthquake related provisions, the weathertight homes financial assistance package and the increase in the ETS provision).
  • Offsetting the increase in the residual cash deficit was the reduction in contributions to the NZS Fund.
Table 14 - Movements in residual cash ($billion)
Year ended 30 June
2010 core Crown residual cash (9.0)
Tax receipts 0.8
Benefit payments (0.6)
Other operating cash flows (4.5)
Reduction in NZS Fund contributions 0.3
Other movements (0.3)
2011 core Crown residual cash (13.3)

Source: The Treasury

Figure 12 - Reconciliation of the operating deficit and core Crown residual cash for the year ended 30 June 2011 ($ billion)
Figure 12 - Reconciliation of the operating deficit and core Crown residual cash for the year ended 30 June 2011 ($ billion).

Gross Debt

Figure 13 - Gross debt
Figure 13 - Gross debt.
Source: The Treasury

Gross debt at 30 June 2011 was $18.8 billion higher than a year earlier (figure 13). The majority of this increase came from the issue of $19.5 billion of domestic market bonds (New Zealand Government bonds). No repayments of market domestic bonds were made during the year. When combined with the proceeds from non-market domestic bonds, the net issuance of domestic bonds increased gross debt by $18.9 billion (table 15).

The New Zealand Debt Management Office (NZDMO) increased the 2010/11 domestic bond programme by $1 billion to $13.5 billion in December 2010. The 2011 Budget approved a further $6 billion increase, allowing the issue of bonds up to $20 billion. These increases enabled the NZDMO to continue issuance over the fiscal year in line with market demand and means borrowing requirements in future years will be less than they would have needed to be in the absence of this additional pre-emptive borrowing. Net debt did not increase by the same amount as gross debt because surplus proceeds from these bond issuances were invested in financial assets.

Table 15 - Cash proceeds from net bond issuance
Year ended 30 June Actual
2006 		Actual
2007 		Actual
2008 		Actual
2009 		Actual
2010 		Actual
2011 		Forecast
30 June 2011
$ million Budget 10 Budget 11
Domestic bonds (market) 2,375 2,294 1,757 5,775 12,424 19,468 12,776 20,760
Repayment of domestic bonds (market) (2,574) (2,777) - (2,750) (4,197) - - -
Net increase/(decrease) in market domestic bonds (199) (483) 1,757 3,025 8,227 19,468 12,776 20,760
Domestic bonds (non-market) 740 570 130 541 799 270 224 372
Repayment of domestic bonds (non-market) (375) (421) - (515) (656) (803) - (1,153)
Net increase/(decrease) in non-market domestic bonds 365 149 130 26 143 (533) 224 (781)
Net total bond issuance/(repayment) 166 (334) 1,887 3,051 8,370 18,935 13,000 19,979

Notes

  • [2]Net debt is defined as core Crown net debt excluding the NZS Fund and advances.
  • [3]Gross debt is defined as gross sovereign-issued debt excluding Reserve Bank settlement cash and Reserve Bank bills.
Page top