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Debt

Table 10 - Net debt[2] and Gross debt[3]
Year ended 30 June Actual
2012
Actual
2013
Actual
2014
Actual
2015
Actual
2016
Forecast
30 June 2016
Budget
2015
Budget
2016
Net debt ($m) 50,671 55,835 59,931 60,631 61,880 65,597 62,272
Net debt (% GDP) 23.5% 25.5% 25.5% 25.1% 24.6% 26.3% 24.9%
Gross debt ($m) 79,635 77,984 81,956 86,125 86,928 87,162 86,783
Gross debt (% GDP) 37.0% 35.6% 34.9% 35.6% 34.5% 34.9% 34.7%
Residual cash ($m) (10,644) (5,742) (4,109) (1,827) (1,322) (4,166) (2,115)
Residual cash (% GDP) (4.9%) (2.6%) (1.7%) (0.8%) (0.5%) (1.7%) (0.8%)

Net Debt

After increasing over the past four years, net debt has flattened while falling as a share of the economy (24.6% of GDP versus 25.1% of GDP a year earlier). Net debt in nominal terms was similar to last year, with an increase of $1.2 billion this June year, as the core Crown continued to run a residual cash deficit albeit reduced from recent years.

Figure 11 - Net debt
Figure 11 - Net debt   .
Source:  The Treasury

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).

Residual Cash

The residual cash deficit was $1.3 billion, $0.5 billion less than last year. Table 11 summarises the contributors to the reduction in the residual cash deficit over the year.

Table 11 - Decrease in residual cash deficit
Year ended 30 June ($ billion)
2015 core Crown residual cash deficit (1.8)
Increase in tax receipts 3.4
Increase in operating payments (1.2)
Decrease in proceeds from share offer (0.6)
Increase in net purchase of investments (0.6)
Other movements (0.5)
2016 core Crown residual cash deficit (1.3)

Source: The Treasury

Tax receipts were $3.4 billion higher than last year, in line with the improvement in core Crown tax revenue as discussed on page 9.

Tax receipts grew faster than operating payments, leading to an operating cash surplus of $3.3 billion. Offsetting the operating cash surplus, capital spending totalled $4.6 billion, resulting in an overall cash deficit. Capital spending included:

  • Net purchase of physical assets of $2.0 billion, including $0.6 billion for the Ministry of Education in relation to school property, $0.4 billion for defence equipment and $0.2 billion for both the Ministry of Justice and the Ministry of Health, mostly related to Canterbury rebuild projects.
  • Net investments of $2.1 billion, the largest of which was the Crown's investment in state highways of $1.1 billion, with $0.4 billion also paid to Southern Response following a call on the Crown Support Deed (for more information refer to Note 28 on page 103).
  • Net increase in advances of $0.5 billion, which included $0.3 billion for student loans.
  • Last year's capital spend was reduced by the receipt of $0.6 billion from the Meridian Energy final instalment of the Government's share offer programme.

Gross Debt

Gross debt, which reflects the borrowings of the core Crown, was $0.8 billion higher than a year earlier at $86.9 billion (Figure 12). As a percentage of the economy, gross debt dropped 1.1% to 34.5% of GDP (35.6% of GDP a year earlier).

Figure 12 - Gross debt
Figure 12 - Gross debt   .
Source:  The Treasury

The increase in nominal gross debt was predominantly the result of an increase in the issuance of Government Stock more than offsetting the Crown's bond and bill repurchasing programme, and a reduction in derivatives in loss and other financial liabilities.

Crown's Borrowing Programme

The debt programme (Table 12) during the current year raised cash from the market of $2.8 billion. The Crown continued to issue bonds ($7.9 billion face value) while Treasury Bill issuance has returned to normal levels after being increased in the previous year to fund the April 2015 bond maturity. The proceeds of the programme are used for working capital requirements.

Overall, once the non-market cash flows (debt issued directly to agencies within the Crown) were included, net cash proceeds from borrowing were $2.5 billion.

Table 12 - Cash proceeds from debt programme
Year ended 30 June
$ million
Actual 2012 Actual 2013 Actual 2014 Actual 2015 Actual 2016 Forecast
30 June 2016
Budget 2015 Budget 2016
Issue of government bonds 15,146 15,458 7,716 8,058 8,079 8,462 8,343
Repayment of government bonds (7,602) (9,982) (2,196) (8,684) (1,779) (1,777) (1,779)
Net issue/(repayment) of short-term borrowing[4] 2,139 (5,404) (935) 4,179 (3,513) (2,400) (3,653)
Total market debt cash flows 9,683 72 4,585 3,553 2,787 4,285 2,911
Issue of government bonds
Repayment of government bonds (1,501) (499) (482) (139) (303) (138)
Net issue/(repayment) of short-term borrowing 430 100 (480) (100) (100) (100)
Total non-market debt cash flows (1,071) (399) (962) (239) (403) (238)
Total debt programme cash flows 8,612 (327) 4,585 2,591 2,548 3,882 2,673

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.
  • [4]Short-term borrowings consists of Treasury Bills and may include Euro-Commercial Paper.
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