Media statement

Interim Financial Statements of the Government of New Zealand for the eight months ended 28 February 2021

The interim Financial Statements of the Government of New Zealand for the eight months ended 28 February 2021 (the financial statements) were released by the Treasury today.

The February 2021 Interim Financial Statements of the Government show that the position and performance of the Crown continue to be stronger than forecast in the Half Year Economic and Fiscal Update (HYEFU).

The results show the impacts of the COVID-19 pandemic are still visible however, with an operating balance before gains and losses (OBEGAL) deficit of $4.5 billion and continued higher levels of net core Crown debt of $103.3 billion (32.6% of GDP).

  Year to date Full Year
HYEFU 2020
HYEFU 2020
HYEFU 2020
HYEFU 2020
Core Crown          
Core Crown tax revenue 60,896 58,612 2,284 3.9 88,346
Core Crown revenue 65,177 62,820 2,357 3.8 94,993
Core Crown expenses 68,921 69,409 488 0.7 114,232
Core Crown residual cash (15,156) (19,773) 4,617 23.4 (40,177)
Net core Crown debt4 103,316 107,735 4,419 4.1 128,649
as a percentage of GDP 32.6% 34.0%     39.7%
Gross debt5 107,941 100,906 (7,035) (7.0) 91,669
as a percentage of GDP 34.1% 31.9%     28.3%
Total Crown          
Operating balance before gains and losses (4,507) (8,169) 3,662 44.8 (21,576)
Operating balance (excluding minority interests) 9,844 (12,204) 22,048 180.7 (25,639)
Total borrowings 164,312 164,014 (298) (0.2) 186,622
Net worth attributable to the Crown 120,501 97,541 22,960 23.5 83,881
as a percentage of GDP 38.1% 30.8%     25.9%
  1. Using the most recently published GDP (for the year ended 31 December 2020) of $316,687 million (Source: Statistics NZ).
  2. Favourable variances against forecast have a positive sign and unfavourable variances against forecast have a negative sign.
  3. Using HYEFU 2020 forecast GDP for the year ending 30 June 2021 of $323,897 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.

Core Crown tax revenue for the eight months to February 2021 was $2.3 billion (3.9%) above the HYEFU 2020 forecast owing to:

  • GST, corporate tax and source deduction revenue were all ahead of forecast by $0.9 billion (5.8%), $0.9 billion (11.6%) and $0.5 billion (1.9%) respectively. These positive variances to forecast reflect an improvement in economic conditions, in particular stronger domestic spending, higher profitability and better labour market conditions than forecast.
  • Partially offsetting the above increases, customs and excise duties were $0.2 billion (5.3%) below forecast driven by lower demand for tobacco products resulting in tobacco duty being $0.3 billion (22.6%) lower than forecast.

Core Crown expenses at $68.9 billion were $0.5 billion below forecast. This was mainly owing to lower than forecast social security and welfare spending, including higher than expected repayments of the COVID-19 Wage Subsidy.

The OBEGAL deficit of $4.5 billion, was $3.7 billion smaller than the forecast deficit of $8.2 billion. This variance was primarily driven by the core Crown results discussed above. When total gains and losses are added to the OBEGAL result, the operating balance was a $9.8 billion surplus, $22.0 billion better than the forecast $12.2 billion deficit. The improvement in the operating balance primarily related to:

  • A valuation gain of $9.2 billion on ACC’s insurance liability compared to the $4.2 billion of losses forecast. This $13.4 billion improvement was largely a result of changes to the discount rates and CPI assumptions used to revalue this liability at 28 February 2021.
  • NZSF and ACC reporting significant positive variances in financial instruments and investments, totalling $5.3 billion.

The core Crown residual cash deficit of $15.2 billion was $4.6 billion smaller than the deficit forecast. This was largely owing to tax receipts being $1.7 billion higher than expected (see previous discussion) and operating payments being $0.9 billion lower than forecast, consistent with the variance in core Crown expenses discussed above. Core Crown capital payments were around $1.9 billion lower than forecast, largely owing to lower than anticipated uptake of advances of the Funding for Lending Programme.

Net core Crown debt was $103.3 billion (32.6% of GDP) at 28 February 2021, $4.4 billion lower than forecast primarily owing to the favourable core Crown residual cash variance discussed above.

Net worth attributable to the Crown at $120.5 billion was $23.0 billion higher than forecast. This variance was primarily owing to the favourable operating balance variance of $22.0 billion and the revaluation of defined benefit retirement plan schemes being $1.4 billion higher than forecast.



Treasury Communications Team
Email: [email protected]