Back to top anchor
Media statement

Interim Financial Statements of the Government of New Zealand for the ten months ended 30 April 2020

Issue date: 
Wednesday, 10 June 2020
Status: 
Current
Corporate author: 
Document Date: 
Wednesday, 10 Jun 2020
Fiscal year: 
2019/20

The interim Financial Statements of the Government of New Zealand for the ten months ended 30 April 2020 (the financial statements) were released by the Treasury today. The financial statements are compared against forecasts based on the 2020 Budget Economic and Fiscal Update (BEFU 2020) published on 14 May 2020.

Core Crown tax revenue was $72.5 billion, $0.2 billion (0.2%) above forecast. This is mainly owing to higher than forecast GST revenue, which was not as adversely affected by lower economic activity as assumed in the GST forecast. This variance was partly offset by lower than forecast corporate tax with Portfolio Investment Entity (PIE) tax, terminal tax and provisional tax all below forecast.

Core Crown expenses were $87.1 billion, $0.4 billion lower than forecast owing mainly to lower than forecast take up of the Business Finance Guarantee Scheme, partially offset by increased health and transport expenditure.

The operating balance before gains and losses (OBEGAL) was a $12.8 billion deficit, $0.6 billion lower than forecast mainly reflecting the core Crown results discussed above.

When total net losses of $9.9 billion ($1.8 billion higher than the losses forecast) are added to the OBEGAL result, the operating balance (excluding minority interests) was a $22.6 billion deficit, $1.2 billion higher than the deficit forecast. This is mainly due to losses on the ACC outstanding claims liability, $6.1 billion higher than the losses forecast, primarily driven by a decrease in the discount rates used to calculate the liability. This was partly offset by net investment losses, $4.4 billion lower than the losses forecast, mainly due to favourable changes in market prices.

Core Crown residual cash was a deficit of $20.9 billion, $1.3 billion higher than the deficit forecast. Core Crown tax receipts were below forecast by $0.1 billion while core Crown payments were $1.0 billion higher than forecast. Capital cash out flows were $0.4 billion higher than forecast. We expect this timing variance to reverse by year end.

Net core Crown debt of $78.8 billion (25.3% of GDP), was $2.3 billion higher than forecast mainly due to the residual cash variance and the timing of unsettled trades ($1.6 billion higher than forecast) partially offset by valuation changes.

Gross debt at $92.9 billion (29.9% of GDP) was $2.6 billion higher than forecast primarily due to an increased balance of Treasury bills and foreign-currency borrowings as a response to significant cash requirements due to the impacts of COVID-19 ($3.6 billion higher than forecast in total). In addition, unsettled trades were higher than forecast by $1.6 billion. These variances were partly offset by Government stock being $3.0 billion lower than forecast which is in part due to Reserve Bank’s Large Scale Asset Purchase Program (LSAP).

Total borrowings at 30 April 2020 were $149.5 billion, $9.0 billion higher than forecast. This is primarily owing to increased settlement deposits with Reserve Bank ($7.8 billion higher than forecast) as Reserve Bank is putting more cash into the system to support the economy. Treasury bills were $7.3 billon, $2.7 billion higher than forecast discussed above. This was partly offset by derivatives in loss being lower than forecast by $1.8 billion due to market conditions changing since the forecast was prepared.

Net worth attributable to the Crown was $114.4 billion, $1.2 billion lower than forecast. The majority of this variance relates to the operating balance for the first ten months of the year as discussed above.

Key indicators for the ten months ended 30 April 2020 compared to BEFU 2020
  Year to date Full Year
April 2020
Actual1
$m
April 2020
BEFU 2020
Forecast1
$m
Variance2
BEFU 2020
$m
Variance
BEFU 2020
%
June 2020
BEFU 2020
Forecast3
$m
Core Crown          
Core Crown tax revenue 72,458 72,281 177 0.2 82,330
Core Crown revenue 78,347 78,196 151 0.2 89,474
Core Crown expenses 87,116 87,542 426 0.5 113,998
Core Crown residual cash (20,909) (19,595) (1,314) (6.7) (32,031)
Net core Crown debt4 78,758 76,431 (2,327) (3.0) 88,935
as a percentage of GDP 25.3% 24.6%     30.2%
Gross debt5 92,871 90,275 (2,596) (2.9) 99,771
as a percentage of GDP 29.9% 29.0%     33.9%
Total Crown          
Operating balance before gains and losses (12,780) (13,409) 629 4.7 (28,293)
Operating balance (excluding minority interests) (22,567) (21,369) (1,198) (5.6) (37,115)
Total borrowings 149,464 140,502 (8,962) (6.4) 164,799
Net worth attributable to the Crown 114,439 115,639 (1,200) (1.0) 100,093
as a percentage of GDP 36.8% 37.2%     34.0%
  1. Using the most recently published GDP (for the year ended 31 December 2019) of $311,034 million (Source: Stats NZ).
  2. Favourable variances against forecast have a positive sign and unfavourable variances against forecast have a negative sign.
  3. Using BEFU 2020 forecast GDP for the year ending 30 June 2020 of $294,207 million (Source: The Treasury).
  4. Net core Crown debt excluding student loans and other advances. Net debt may fluctuate during the year largely reflecting the timing of tax receipts.
  5. Gross sovereign-issued debt excluding settlement cash and Reserve Bank bills.

ENDS

Enquiries

Treasury Communications Team
Tel: +64 4 917 6268
Email: [email protected]
Last updated: 
Wednesday, 10 June 2020