Media StatementFinancial Statements of the Government of New Zealand for the Six Months Ended 31 December 2009

19 Feb 2010

Colin Lynch
Deputy Secretary to the Treasury

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

The monthly financial statements are compared against monthly forecast tracks based on the 2009 Half Year Economic and Fiscal Update published in December 2009.

Results for the six months ended 31 December 2009

• Core Crown tax revenue was $0.3 billion (1.4%) higher than forecast.  Included in this result was a $0.3 billion increase in revenue in relation to the settlement of structured finance transactions announced in late December.   The Crown had recognised $1.4 billion in core tax revenue from these transactions in the previous financial year.  Additional tax revenue of $0.3 billion has been recognised in the current financial year to take into account the terms of the settlement and an estimate of the applicable use of money interest.
  Excluding this settlement, corporate tax revenue was broadly in line with forecast.  Both GST and source deduction revenue continued the trend from November with source deductions being $0.2 billion (1.9%) less than expected while GST was $0.3 billion (5.7%) higher than expected.
• Core Crown expenses were $0.5 billion (1.7%) lower than forecast due to the timing of Treaty of Waitangi settlements being later than forecast ($0.2 billion) and a reduction in the provision for the deposit guarantee scheme ($0.1 billion).  The remainder of the variance is made up of individually small items.
• Given the higher tax revenue and lower expenses, the operating balance before gains and losses deficit was $0.8 billion smaller than expected.  When combined with higher than estimated investment gains, the operating deficit was $1.5 billion smaller than forecast.
• In contrast, the residual cash deficit was $1.0 billion larger than forecast primarily due to departments incorrectly forecasting the timing of cash outflows.  Payments occurred in late December that had been forecast in January.  As a result, this residual cash variance is expected to reverse in January.
• This larger residual cash deficit is the primary reason for net debt being $1.0 billion higher than forecast at $26.1 billion (14.1% of GDP).  The expected reversal of the residual cash variance is expected to flow through to net debt.
• Gross debt was $3.5 billion lower than forecast with Treasury bills on issue $1.8 billion lower than expected because market conditions meant maintaining Treasury bill issuance below forecast levels was cost effective.  In addition, the Reserve Bank’s unsettled trade liabilities and NZDMO’s collateral liabilities were lower than forecast (although these positions were partially offset by a higher demand for circulating currency over the holiday period). 

1. Using GDP for the year ended 30 September 2009 of $184,917 million (Source: Statistics New Zealand).
2. Using forecast GDP for the year ended 30 June 2010 of $184,466 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.