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Media StatementFinancial Statements of the Government of New Zealand for the Seven Months Ended 31 January 2007

14 March 2007

Dr Peter Bushnell
Deputy Secretary to the Treasury

The Financial Statements of the Government of New Zealand for the seven months ended 31 January 2007 were released by the Treasury today.

The 31 January 2007 monthly financial statements are compared against updated monthly forecast tracks based on the 2006 Half Year Economic and Fiscal Update.

$ millionJanuary 2007
Actual
YTD
January 2007
Forecast
YTD
Variance
$m
HYEFU June
2007
Forecast
June
2006
Actual
Residual cash574(242)8161072,985
Operating balance5,5754,3091,2666,26011,473
OBERAC4,4274,3091185,7688,648
Gross sovereign-issued debt36,09637,099(1,003)37,86735,461
% of GDP22.923.5(0.6)23.722.6
Net core Crown debt6,6767,065(389)6,3827,745
% of GDP4.24.5(0.3)4.04.9
Net core Crown debt with NZS Fund assets(5,066)(4,336)(730)(6,271)(2,116)
% of GDP(3.2)(2.1)(0.5)(3.9)(1.3)
Net worth87,35375,76711,58677,71871,403

The following table outlines the key variances and their likely impact:

Item/indicatorVarianceKey driversImpact on year end outturn
Tax Revenue-$0.1 billion
Net investment income (major contributor to the Operating Balance variance)+$1.2 billion
  • Largely unrealised gains on investment held by the
    • NZSF ($0.5 billion)
    • ACC ($0.3 billion)
    • GSF ($0.1 billion), and
  • Higher than forecast foreign exchange gains ($0.3 billion)
Net investment returns are looking positive, however in the short term they can be volatile
Investments returns are retained by these entities and are not available for redistribution
Core Crown expenditure- $0.2 billion
  • Delays in departmental spending
Departments expect that the majority of the delays in spending will catch up by year end
OBERAC+ $0.1 billionBroadly in line with forecast
GSID- $1.0 billion
  • Settlement cash levels are higher than forecast by $0.8 billion, offset by reductions of around $2.0 billion in Reserve Bank’s other lending facilities and DMO borrowing
Settlement cash levels have decreased from last month by $0.4 billion. Uncertainty remains over long term levels and volatility
Net Worth+ $ 11.6 billion
  • Revaluation of the rail network ($10.3 billion), and
  • Operating balance impact of the higher than expected net investment returns and delays in departmental spending ($1.3 billion)
Ongoing increase in net worth and $140 million per annum depreciation on rail network reducing the operating balance
Residual cash+ $0.8 billion
  • Funding for the purchase of Reserve Bank reserves in the forecast not taking place ($0.5 billion)
  • Delays in departmental spending on both operating and capital payments
This forecast increase in reserves funding will not take place

ENDS

Officer for Enquiries

Kamlesh Patel | Macroeconomic Group
Tel: +64 4 471 5094
Fax: +64 4 471 5956
Email: kamlesh.patel@treasury.govt.nz
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