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Media StatementFinancial Statements of the Government of New Zealand for the Six Months Ended 31 December 2006

28 February 2007

MEDIA STATEMENT
Embargoed until 10:00am, Wednesday 28 February 2007

Dr Peter Bushnell
Deputy Secretary to the Treasury

The Financial Statements of the Government of New Zealand for the six months ended 31 December 2006 were released by the Treasury today.

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

$ millionDecember
2006
Actual
YTD
December
2006
Forecast
YTD
Variance
$m
HYEFU June
2007
Forecast
June
2006
Actual
Residual cash(423)(860)4371072,985
Operating balance4,4703,4939776,26011,473
OBERAC3,5903,493975,7688,648
Gross sovereign-issued debt38,07037,24982137,86735,461
% of GDP24.123.60.523.722.6
Net core Crown debt7,0857,823(738)6,3827,745
% of GDP4.55.0(0.5)4.04.9
Net core Crown debt with NZS Fund assets(4,342)(3,370)(972)(6,271)(2,116)
% of GDP(2.8)(2.1)(0.7)(3.9)(1.3)
Net worth86,24874,95111,29777,71871,403

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

Item/indicatorVarianceKey driversImpact on year end outturn
Tax RevenueIn line with forecast-As in the HYEFU forecast
Core Crown expenditureBroadly in line with forecast- As in the HYEFU forecast
Operating balance+ $ 1 billion
  • Higher than expected investment returns by:
    • NZSF ($355 million)
    • ACC ($254 million)
    • GSF ($92 million), and
  • Higher than forecast foreign exchange gains ($301 million)
It is still early in the year, although investment returns are looking likely to be positive

Investment returns (or losses) in these entities are retained by the entities and are not available for redistribution

GSID+ $ 0.8 billionFurther increase of $1.3 billion in the settlement cash level by the Reserve Bank, taking the balance from $7.5 billion to $8.8 billionLevel raised primarily to increase settlement cash available over the Christmas period. Some uncertainty remains over long term levels and volatility
Net Worth+ $ 11.3 billion
  • Revaluation of the rail network ($10.3 billion), and
  • Operating balance impact of the higher than expected investment returns and foreign exchange gains ($1 billion)
Ongoing increase in net worth and $140 million per annum depreciation reducing the operating balance
Residual cash+ $0.4 billionPurchase of Reserve Bank reserves in forecast not taking place ($0.5 billion)Likely that reserves levels will be lower than in the HYEFU forecast

ENDS

Officer for enquiries:

Kamlesh Patel | Macroeconomic Group
Tel: 64 4 471-5094
Fax: 64 4 499-0992
E-mail: kamlesh.patel@treasury.govt.nz

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