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Financial Statements of the Government of New Zealand for the Eleven Months Ended 31 May 2013

5 Jul 2013

The Financial Statements of the Government of New Zealand for the eleven months ended 31 May 2013 were released by the Treasury today.

These financial statements are compared against forecasts based on the Budget Economic and Fiscal Update (BEFU), released on 16 May 2013. 

Overall, all key indicators were better than forecast.  The operating balance before gains and losses deficit was $3.3 billion, which was $763 million lower than expected largely owing to higher than forecast core Crown tax revenue. 

At $502 million above forecast, Core Crown tax revenue continued the trend from recent months, with large positive variances in corporate tax ($496 million) and tax from other persons ($164 million), partially offset by a negative variance in GST ($222 million).  Higher-than-expected profitability, in part owing to strength in financial markets, contributed to the positive variances and we expect that the differences in core Crown tax revenue will persist to year-end. 

Sustained strength in equity markets, and reductions in the valuation of long-term liabilities (primarily owing to changes in the discount rate), resulted in gains of $9.4 billion so far this year, $2.0 billion ahead of forecast.  Gains on the Crown’s investment portfolios were $1.7 billion higher than expected, with the NZS Fund contributing $1.2 billion of this difference.  In addition, actuarial gains on the ACC outstanding claims liability were $358 million above forecast at $1.0 billion in contrast to the year-to-date losses of $0.8 billion to 30 April.  The turn-around of the actuarial loss was a result of an increase in the discount rate during May and highlights the volatility associated with the valuations of the long-term liabilities. 

The higher than forecast core Crown tax revenue and gains were the key reason for the operating balance surplus being $2.7 billion higher than forecast, to be $6.5 billion at the end of May.

The partial sale of shares in Mighty River Power occurred during May, so has been captured in this month’s financial statements.  Total proceeds from the sale were just under $1.7 billion, compared to the $1.5 billion included in forecasts, which was based on the average of the entire programme rather than the specific sale.  Further information about this transaction is included in the financial statements.  

These higher than forecast cash proceeds from the partial sale of Mighty River Power and favourable variances in tax receipts ($322 million) and operating payments ($222 million) contributed to the residual cash deficit being $768 million below forecast. 

As a result of the lower than expected residual cash deficit, net debt was $800 million lower than forecast at $55.7 billion, or 26.4% of GDP.

Gross debt was close to forecast at $78.4 billion, or 37.0% of GDP. 


Year to date Full Year
$ million May
2013
Actual1
May
2013
BEFU
Forecast1
Variance
to BEFU
$m
Variance
to BEFU
%
June
2013
BEFU
Forecast2
Core Crown




Core Crown tax revenue 54,008
53,506
502
0.9 58,286
Core Crown revenue
58,889
58,431
458
0.8
63,809
Core Crown expenses 63,738
63,834
96
0.2 71,649
Core Crown residual cash (5,582) (6,350) 768
12.1
(7,750)
Gross debt3 78,353
78,634
281
0.4
78,636
as a percentage of GDP 37.0% 37.2%     36.8%
Net debt4 55,741
56,541
800
1.4
57,945
as a percentage of GDP 26.4% 26.7%     27.1%
Total Crown          
Operating balance before gains and losses (3,265) (4,028) 763
18.9
(6,285)
Operating balance 6,476
3,754
2,722
72.5
1,918
Net worth attributable to the Crown
66,127 63,382
2,745
4.3
61,476

1    Using GDP for the year ended 31 March 2013 of $211,522 million (Source: Statistics New Zealand)
2    Using forecast GDP for the year ended 30 June 2013 of $213,844 million (Source: Treasury)
3    Gross sovereign-issued debt excluding settlement cash and Reserve Bank bills
4    Net core Crown debt excluding student loans and other advances

ENDS

Officer for Enquiries

Kamlesh Patel | Office of the Chief Financial Officer and Chief Accountant Portfolio
Tel: +64 4 917 6094
Email: kamlesh.patel@treasury.govt.nz
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