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Fiscal Strategy Model

Page updated 21 May 2015

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 Budget Economic and Fiscal Update 2015 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 economic and fiscal forecasts that provide their base
  • 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).


The FSM has been rebuilt since its last publication at the 2014 Half Year Economic and Fiscal Update (HYEFU). In particular the ability to project cash, as well as accrual variables, has been added and the modelling of assets and non-debt liabilities has been significantly expanded. More detail on the new FSM is available in the note The New Fiscal Strategy Model, which can be downloaded from the section below. This note also shows and discusses comparison tracks of three key fiscal indicators produced by the previous and new versions of the FSM, both from a Budget 2015 forecast base.

Also downloadable from the section below is a note Projection Assumptions Budget 2015. This provides further information about the post-forecast projections, including detailing some of the key assumptions and providing data tables for both economic and fiscal variable projections. Previously this material was published as Annex 3 of the Fiscal Strategy Report.

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, and different NZS Fund tracks, can be tested using the Fiscal Forecast Adjuster and NZS Fund Adjuster worksheets of the FSM. The output of these scenarios can be modelled in the Option worksheet.

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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