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Fiscal Strategy Model

Page updated 16 Dec 2014

The Fiscal Strategy Model (FSM) projects the financial performance and the financial position of the government over a medium-term horizon and is normally published with the latest Economic and Fiscal Update.

Note: Previously these medium-term projections were done by the Long Term Fiscal Model (LTFM) however the LTFM is now used solely for longer-term projections (minimum of 40 years).

Fiscal Strategy Model Projections

The principal purpose of the FSM is to produce the post-forecast fiscal projections. 

The Half Year Economic and Fiscal Update 2014 updated version of the FSM is published here on the Treasury's website.

The projections:

  • begin from the end of the five-year forecasts in Economic and Fiscal Updates (EFUs) and normally cover a period of ten years beyond that
  • are strongly influenced by the EFU forecasts
  • are consistent with the Government's approach to fiscal management in that new initiatives are modelled through assumed operating and capital allowances
  • grow operating and capital allowances from their end-of-forecast levels at prescribed rates, as no decisions on the size of these spending increments are made beyond the five-year forecast horizon
  • rely on long-term assumptions such as future population growth and economic growth
  • include some degree of recovery to these long-term assumptions in the early years of the projections, if the long-term rates or levels have not been reached at the end of the forecast period, and
  • are required to be published annually, as part of the Fiscal Strategy Report, under the Public Finance Act (1989).


After the economic forecasts that were used in this version of this model were finalised, updated annual estimates of nominal GDP were released by Statistics New Zealand. These new estimates showed that nominal GDP in recent years was higher than in the data used as the base of the nominal GDP forecasts and projections in this model.

A revised nominal GDP track was produced to reflect this higher historical base, using the same growth rates as in the original nominal GDP track. This revised nominal GDP track is used only in the production of data or graphs that relate to any fiscal variable expressed as a percentage of nominal GDP. The original nominal GDP track is still used in its normal role in the model of producing projected fiscal variables, such as tax revenue.

Download the Fiscal Strategy Model

This model is a special purpose document and cannot be provided in HTML format or CSV format.
Using MS Excel Files

Notes for this Version of the Fiscal Strategy Model

  • Scenarios for different levels of operating expenses and revenue can be tested using the Forecast Adjuster sheet of the FSM. The output of the Forecast Adjuster is in the Option worksheet.
  • The FSM has been updated to incorporate the latest economic and fiscal forecasts contained in the HYEFU. A summary of key economic and demographic assumptions in the HYEFU FSM are provided in the Excel file 'Economic and Demographic Projections - HYEFU 2014', above.
  • More detail on assumptions and modelling behind both economic and fiscal projections can be found in Annex 3 of the 2014 Fiscal Strategy Report (FSR). It should be appreciated that the HYEFU FSM's forecast base data and ensuing projection data will not match those in the 2014 FSR, but the descriptions of modelling techniques and assumptions are still applicable. Any significant updates to projection assumptions, such as the Operating Allowances in the first projected year, can be found in the Describe worksheet of the 2014 HYEFU FSM.

Other Treasury Models

The Long-Term Fiscal Model

Treasury produces another model that projects fiscal and economic variables beyond the forecasts. It is called the Long-Term Fiscal Model (LTFM).

The LTFM differs from the FSM in that:

  • modelling for the LTFM extends at least as far as the year ending June 2060
  • the LTFM's projections are not intended to assess the Government's fiscal strategy
  • in regard to the last point, the LTFM projects individual operating and capital expenditure classes with their own particular cost drivers, such as changes in the recipient population and expense growth factors based on historical averages, rather than restricting their growth to a share of projected operating or capital allowances, and
  • the LTFM has more modelling capability so that it can, for example, produce scenarios where debt is constrained and some other fiscal variable, such as expenditure or tax revenue, becomes the balancing output.

New Zealand Superannuation (NZS) Fund Contribution Rate Model

The projected required contributions track from the Treasury's New Zealand Superannuation (NZS) Fund Contribution Rate Model is an input into the LTFM and the FSM.

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