Financial Statements of the Government of New Zealand for the Nine Months Ended 31 March 2009

Dr Peter Bushnell
Deputy Secretary to the Treasury

The Financial Statements of the Government of New Zealand for the nine months ended 31 March 2009 were released by the Treasury today.

Results for the nine months ended 31 March 2009#

• The tax revenue was approximately $1.9 billion lower than forecast in the Pre-Election Update ($0.7 billion lower than in the December Update). We expect that, compared to the December Update, the tax variances will become increasingly negative through the 2008/09 fiscal year as the continued deterioration in the world economic situation flows through to the New Zealand economy.
• The operating balance before gains and losses (OBEGAL) was a $0.2 billion deficit. This was $2.1 billion lower than forecast in the Pre-Election Update and $1.3 billion lower than forecast in the December Update mainly due to the lower-than-expected tax revenue result. 
• Including gains and losses, the operating deficit of $7.7 billion was $11.2 billion lower than the forecast surplus in the Pre-Election Update and approximately $3.2 billion lower than forecast in the December Update. The main contributors to this result were lower than forecast tax revenue ($1.9 billion), higher than forecast investment losses ($5.3 billion), and actuarial losses on both the ACC insurance liability ($2.0 billion) and the GSF net pension liability ($2.4 billion). Offsetting these variances was a net gain of $0.7 billion resulting from the Kyoto net liability moving to a net asset. This change resulted from declining agriculture emissions, greater information being available around the effects of deforestation, and a reduction in the forecast for deforestation emissions.
• Gross debt (Gross Sovereign-Issued Debt less settlement cash) continues to be significantly higher than forecast in the Pre-Election Update at $45.0 billion (25.1% of GDP) with higher than forecast issues of Reserve Bank bills, Treasury Bills and derivative liabilities. Reserve Bank Bills (like settlement cash) are borrowings incurred for liquidity management purposes, rather than reflecting the government’s underlying borrowing needs. Excluding these bills, gross debt would have been $40.8 billion (22.7% of GDP).
• Although gross debt has increased, financial assets have also increased as a result, minimising the impact on net debt.

1  For the purposes of this indicator, the NZS Fund is treated as a third party (i.e. its revenue is not included but the tax it pays is).

2  Using GDP for the year ended 31 December 2008 of $180,444 million (Source: Statistics New Zealand).

3  Using forecast GDP for the year ended 30 June 2009 of $184,390 million (Source: Treasury).

4  Using forecast GDP for the year ended 30 June 2009 of $181,139 million (Source: Treasury).

ENDS