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Debt

Table 11 - Net debt, gross debt and residual cash
Year ended 30 June Actual
2013
Actual
2014
Actual
2015
Actual
2016
Actual
2017
Forecast
30 June 2017
Budget
2017
Budget
2016
Net debt1 ($m) 55,835 59,931 60,631 61,880 59,480 66,334 62,277
Net debt (% GDP) 25.5% 25.4% 24.9% 24.4% 22.2% 25.6% 23.2%
Gross debt2 ($m) 77,984 81,956 86,125 86,928 87,141 93,880 88,645
Gross debt (% GDP) 35.7% 34.7% 35.4% 34.3% 32.5% 36.2% 33.0%
Residual cash ($m) (5,742) (4,109) (1,827) (1,322) 2,574 (4,162) 71
Residual cash (% GDP) (2.6%) (1.7%) (0.8%) (0.5%) 1.0% (1.6%) 0.0%
  1. Net debt is defined as core Crown net debt excluding the NZS Fund and advances.
  2. Gross debt is defined as gross sovereign-issued debt excluding the Reserve Bank settlement cash and Reserve Bank bills.

Net Debt

The residual cash surplus has resulted in, in nominal terms, net debt decreasing. At $59.5 billion, net debt has decreased by $2.4 billion since 2015/16. As a share of the economy, net debt continued to fall (22.2% of GDP versus 24.4% 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 core Crown debt
Figure 13 - Net core Crown debt.
Source: The Treasury

Residual Cash

Net operating cash flows of $6.3 billion for the year exceeded net capital spending of $3.7 billion, resulting in a residual cash surplus of $2.6 billion. The surplus compares to a residual cash deficit of $1.3 billion last year. Table 12 summarises the movements from residual cash deficit last year to surplus in the current year.

The net core Crown operating cash flow was $6.3 billion, an increase of $3.0 billion from last year with the increase in tax receipts larger than the increase in operating payments. Tax receipts were $5.0 billion higher than last year,in line with the increase in core Crown tax revenue as discussed on page 7. Operating payments increased in line with core Crown expenses, resulted in an increase in cash outflows of $2.4 billion.

Table 12 - Movement in residual cash
Year ended 30 June ($ billion)  
2016 core Crown residual cash deficit (1.3)
Increase in tax receipts 5.0
Increase in operating payments (2.4)
Decrease in capital spending 0.9
Other movements 0.4
2017 core Crown residual cash surplus 2.6

Source:  The Treasury

Overall, capital payments were $0.9 billion less than last year. Net purchase of physical assets increased by $0.2 billion, however this was offset by a net repayment of advances of $0.6 billion, and a decrease in purchase of investments of $0.5 billion.

Figure 14 - Net core Crown capital cash flows
Figure 14 - Net core Crown capital cash flows.
Source: The Treasury

Capital spending for 2016/17 totalled $3.7 billion and included:

  • Net purchase of physical assets of $2.2 billion, including $0.7 billion by the Ministry of Education in relation to school property, $0.4 billion for defence equipment and $0.2 billion by the Ministry of Health (mostly related to Canterbury rebuild projects).
  • Net investments of $1.7 billion, the largest of which was the Crown's investment in state highways of $1.0 billion, with $0.3 billion paid to Southern Response following a call on the Crown Support Deed.
  • Net advances was an inflow of $0.1 billion, including repayment of loan proceeds of $0.5 billion, being partially offset by an increase of $0.2 billion for student loans.
Figure 15 - Profile of net core Crown capital cash flows
Figure 15 - Profile of net core Crown capital cash flows.
Source: The Treasury

Around 60% of capital spending ($2.3 billion) has been on the transport and education sectors (figure 15). The total spend in the transport sector was $1.3 billion (35.6%), with a majority of this being spent on progressing the Roads of National Significance, which included completing the Waterview Tunnel, Kāpiti expressway and Auckland region projects. $0.9 billion (24.8%) was spent on Education sector, purchasing physical assets (as discussed above), investing in schools and upgrading existing property to maintain the quality of the property portfolio of the State School sector.

Gross Debt

Gross debt, which reflects the borrowings of the core Crown, increased nominally by $0.2 billion compared to last year at $87.1 billion (figure 16). However, as a percentage of the economy, gross debt dropped 1.8% to 32.5% of GDP (34.3% of GDP a year earlier).

Figure 16 - Gross debt
Figure 16 - Gross debt.
Source: The Treasury

Overall, the Crown's borrowing programme added $1.1 billion to gross debt (table 13). Partially offsetting the increase was a reduction in other liabilities, including derivative liabilities.

During the current year the debt programme raised cash from the market of $1.9 billion. The Crown continued to issue bonds ($8.0 billion face value) while Treasury Bills outstanding were broadly unchanged. The proceeds from bond issuance were largely used to fund repurchases of the December 2017 bond maturity. Repurchasing these securities prior to maturity assists in smoothing the Crown's cash profile, reduces refinancing risk, and minimises any residual market impacts associated with the maturity of this bond.

Table 13 - Cash proceeds from debt programme
Year ended 30 June Forecast
30 June 2017
$ million Actual
2013
Actual
2014
Actual
2015
Actual
2016
Actual
2017
Budget
2016
Budget
2017
Issue of government bonds 15,458 7,716 8,058 8,079 7,847 7,893 8,014
Repayment of government bonds (9,982) (2,196) (8,684) (1,779) (6,080) (5,055)
Net issue/(repayment) of short-term borrowing1 (5,404) (935) 4,179 (3,513) 160 400 60
Total market debt cash flows 72 4,585 3,553 2,787 1,927 8,293 3,019
Issue of government bonds
Repayment of government bonds (499) (482) (139) (830) (665) (833)
Net issue/(repayment) of short-term borrowing 100 (480) (100)
Total non-market debt cash flows (399) (962) (239) (830) (665) (833)
Total debt programme cash flows (327) 4,585 2,591 2,548 1,097 7,628 2,186
  1. Short-term borrowings consists of Treasury Bills and may include Euro-Commercial Paper.
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