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Debt

Table 9 - Net debt [3] and Gross debt[4]
Year ended 30 June Actual 2010 Actual 2011 Actual 2012 Actual 2013 Actual 2014 Forecast
30 June 2014
Budget 13 Budget 14
Net debt ($m) 26,738 40,128 50,671 55,835 59,931 64,765 59,421
Net debt (% GDP) 13.9% 20.0% 24.2% 26.3% 26.2% 28.4% 25.8%
Gross debt ($m) 53,591 72,420 79,635 77,984 81,956 87,686 82,157
Gross debt (% GDP) 27.8% 36.0% 38.1% 36.7% 35.8% 38.5% 35.6%
Residual cash ($m) (9,000) (13,343) (10,644) (5,742) (4,109) (6,886) (3,914)
Residual cash (% GDP) (4.7%) (6.6%) (5.1%) (2.7%) (1.8%) (3.0%) (1.7%)

Net Debt

Net debt increased by $4.1 billion this June year, as the Crown continued to run a residual cash deficit, but didn't increase as fast as the nominal economy. As a share of the economy, net debt was 26.2% of GDP (versus 26.3% of GDP a year earlier).

The fiscal overview, on pages 4 and 5, summarises the link from the OBEGAL (a total Crown measure of total revenue less total expenses) to net debt (a core Crown measure of debt).

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

Residual Cash

The residual cash deficit was $4.1 billion, $1.6 billion less than last year. Table 10 summarises the contributors to the reduction in the residual cash deficit over the year.

  • Tax receipts were $3.5 billion higher than last year, which was in line with the improvement in core Crown tax revenue as discussed on page 10.
  • The Crown received $2.3 billion from the remaining companies in the Government's share offer programme (compared with $1.6 billion received for Mighty River Power last year). Refer to the box on page 20 for further discussion about the share programme.
  • Operating and interest payments were $2.2 billion higher than last year, in line with the increase to core Crown expenses and timing of cash payments being made.
Table 10 - Movements in residual cash
Year ended 30 June
2013 core Crown residual cash (5.7)
Increase in tax receipts 3.5
Proceeds from share offer 0.7
Increase in operating payments (2.2)
Other (0.4)
2014 core Crown residual cash   (4.1)

Source: The Treasury

In addition to the operating cash deficits recorded during the year, the core Crown spent the following on capital:

  • Net purchases of physical assets of $1.9 billion, including $0.5 billion for the Ministry of Education, $0.4 billion for Defence and $0.3 billion for the Canterbury Earthquake Recovery Authority.
  • Net investments of $0.9 billion, the largest of which is the Crown's investment in the New Zealand Transport Agency of $0.8 billion.
  • Net increase in advances of $0.7 billion, which includes $0.5 billion for student loans.

This capital expenditure was partly offset by the Government share offer proceeds of $2.3 billion.

Compared with Budget 2014, the residual cash deficit was $0.2 billion higher mostly due to tax receipts coming in lower than forecast.

Gross Debt

Gross debt, which reflects the borrowings of the core Crown, was $4.0 billion higher than a year earlier at $82.0 billion (Figure 14). As a percentage of a growing nominal economy, gross debt eased to 35.8% of GDP.

Figure 14 - Gross debt
Figure 14 - Gross debt   .
Source:  The Treasury

The increase in nominal gross debt was predominantly the result of an increase in the issuance of government bonds more than offsetting the Crown's bond and bill repurchasing programme.

Crown's Borrowing Programme

The debt programme (Table 11) during 2013/14 returned net cash proceeds from the market of $4.6 billion. While the Crown continued to undertake a large bond programme ($8 billion face value), some proceeds were used to repurchase debt ($2.2 billion) and reduce Treasury Bills outstanding ($0.9 billion); both activities were signalled in Budget 2014.

Table 11 - Cash proceeds from debt programme
Year ended 30 June

$ million

Actual
2010
Actual
 2011
Actual
2012
Actual
 2013
Actual
 2014
Forecast
30 June 2014
Budget 13 Budget 14
Issue of government bonds 12,424 19,468 15,146 15,458 7,716 10,245 7,769
Repayment of government bonds (4,197) (7,602) (9,982) (2,196) (2,046)
Net issue/(repayment) of short-term borrowing[5] 636 (422) 2,139 (5,404) (935) 90 (795)
Total market debt cash flows 8,863 19,046 9,683 72 4,585 10,335 4,928
Issue of government bonds 799 270
Repayment of government bonds (656) (803) (1,501) (499) (757)
Net issue/(repayment) of short-term borrowing 170 (125) 430 100 (219)
Total non-market debt cash flows 313 (658) (1,071) (399) (976)
Total debt programme cash flows 9,176 18,388 8,612 (327) 4,585 9,359 4,928

Notes

  • [3]Net debt is defined as core Crown net debt excluding the NZS Fund and advances.
  • [4]Gross debt is defined as gross sovereign-issued debt excluding Reserve Bank settlement cash and Reserve Bank bills.
  • [5]Short-term borrowing consists of Treasury Bills and may include Euro-Commercial Paper.
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