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Debt

Table 16 - Net debt [4] and Gross debt[5]
Year ended 30 June Actual
2008 		Actual
2009 		Actual
2010 		Actual
2011 		Actual
2012 		Forecast
30 June 2012
Budget 11 Budget 12
Net debt ($m) 10,258 17,119 26,738 40,128 50,671 54,872 51,921
Net debt (% GDP) 5.6% 9.3% 14.2% 20.3% 24.8% 27.5% 25.0%
Gross debt ($m) 31,390 43,356 53,591 72,420 79,635 77,764 80,142
Gross debt (% GDP) 17.0% 23.5% 28.4% 36.6% 38.9% 38.9% 38.5%

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.

Net debt increased this year, continuing the steady increase since the global financial crisis (figure 11). Net debt increased from last year primarily due to additional borrowings over the year to meet the residual cash deficit (refer table 17).

Figure 11 - Net debt
Figure 11 - Net debt .
Source:  The Treasury
Table 17 - Movement in net debt
Year ended 30 June
$ million 		Actual
2008 		Actual
2009 		Actual
2010 		Actual
2011 		Actual
2012 		Forecast
30 June 2012
Budget 11 Budget 12
Opening net debt 13,380 10,258 17,119 26,738 40,128 41,502 40,128
Net core Crown cash flow from operations (7,292) 1,967 4,991 9,285 7,210 9,507 8,236
Contributions to NZS Fund 2,104 2,243 250 -  -  -  - 
Purchase of physical assets 1,433 1,625 1,778 1,524 1,262 1,863 1,631
Advances and capital injections 1,698 2,804 1,981 2,534 2,172 2,112 2,252
Core Crown residual cash (surplus)/deficit (2,057) 8,639 9,000 13,343 10,644 13,482 12,119
Movements in circulating currency (86) (475) (15) (234) (234) (181) (34)
Other valuation changes in financial assets and financial liabilities (979) (1,303) 634 281 133 69 (292)
Closing net debt 10,258 17,119 26,738 40,128 50,671 54,872 51,921

The residual cash deficit at $10.6 billion was $2.7 billion less than last year and $1.5 billion lower than forecast.

Table 18 summarises the movement in residual cash over the year. Specifically:

  • Core Crown tax receipts were $2.8 billion higher than last year, which was consistent with the increase in core Crown tax revenue.
  • While core Crown expenses have decreased by $1.4 billion, operating cash payments have were $0.2 billion higher than last year. The reason for this difference was that a number of the expense decreases did not have an immediate cash impact (eg, earthquake related provisions, the weathertight homes financial assistance package and the decrease in the ETS provision).
  • Interest payments increased $0.7 billion in line with the increase in debt.
Table 18 - Movements in residual cash
Year ended 30 June ($billion)  
2011 core Crown residual cash (13.3)
Tax receipts 2.8
Other receipts 0.2
Purchase of assets 0.2
Operating payments (0.2)
Interest payments (0.7)
Other movements 0.4
2012 core Crown residual cash (10.6)
Source:  The Treasury
Figure 12 - Reconciliation of the operating deficit and core Crown residual cash for the year ended 30 June 2012 ($billion)
Figure 12 - Reconciliation of the operating deficit and core Crown residual cash for the year ended 30 June 2012 ($billion) .

Gross Debt

Gross debt at 30 June 2012 was $79.6 billion, $7.2 billion higher than a year earlier (figure 13). The majority of the increase in gross debt came from the 2011/12 borrowing programme.

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

The net cash proceeds of market debt were $9.7 billion, sourced mainly from New Zealand government bonds ($7.5 billion) with the remainder from short term borrowing.

The increase in market bonds was marginally offset by the repayment of $1.5 billion of non-market government bonds which led to net issuance from the debt programme of $8.6 billion (table 19).

Cash proceeds from the debt programme were $0.6 billion lower than forecast. This was due to 2012 bond issuance being lower than forecast at Budget, partially offset by higher than forecast issuance of treasury bills.

Table 19 - Cash proceeds from debt programme
Year ended 30 June
$ million 		Actual
2008 		Actual
2009 		Actual
2010 		Actual
2011 		Actual
2012 		Forecast
30 June 2012
Budget 11 Budget 12
Issue of government bonds 1,757 5,775 12,424 19,468 15,146 13,635 17,012
Repayment of government bonds -  (2,750) (4,197) -  (7,602) (7,602) (7,602)
Net issue/(repayment) of short-term borrowing1 (618) 5,782 636 (422) 2,139 1,534 1,342
Total market debt cash flows 1,139 8,807 8,863 19,046 9,683 7,567 10,752
Issue of government bonds 130 541 799 270 -  187 - 
Repayment of government bonds -  (515) (656) (803) (1,501) (1,113) (1,501)
Net issue/(repayment) of short-term borrowing (30) (150) 170 (125) 430 -  (50)
Total non-market debt cash flows 100 (124) 313 (658) (1,071) (926) (1,551)
Total debt programme cash flows 1,239 8,683 9,176 18,388 8,612 6,641 9,201

1. Short-term borrowing consists of Treasury bills and may include Euro-Commercial Paper.

Notes

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