Interim Financial Statements of the Government of New Zealand for the eight months ended 29 February 2024

The interim Financial Statements of the Government of New Zealand for the eight months ended 29 February 2024 were released by the Treasury today.

1. Using the most recently published GDP (for the year ended 31 Dec 2023) of $405,145 million (Source: Stats NZ).
2. Favourable variances against forecast have a positive sign and unfavourable variances against forecast have a negative sign.
3. Using HYEFU 2023 forecast GDP for the year ending 30 June 2024 of $419,982 million (Source: The Treasury).
4. Net core Crown debt excludes the NZS Fund and core Crown advances. Net core Crown debt may fluctuate during the year largely reflecting the timing of tax receipts.

Core Crown tax revenue at $78.8 billion, was $0.5 billion (0.6%) below forecast. The variance was largely owing to corporate tax and net other individual’s tax being below forecast by $0.6 billion and $0.3 billion, respectively. This was due to reduced taxable profits on both filed and estimated tax assessments because of deteriorating macroeconomic factors.

Core Crown revenue at $87.4 billion was $0.6 billion lower than forecast, mainly reflecting the core Crown tax revenue results. In addition, revenue from the Emissions Trading Scheme was lower than expected due to a drop in the price of New Zealand Units, but this was offset by higher interest revenue as a result of higher-than-expected yields on bond investments.

Core Crown expenses at $89.3 billion was lower than forecast by $1.2 billion. This variance was distributed across several areas and are expected to be mostly timing in nature.

The operating balance before gains and losses (OBEGAL) deficit of $4.2 billion was in line with the forecast. While core Crown results were stronger by $0.5 billion, this was offset by weaker SOE results.

The operating balance deficit of $0.1 billion was $3.5 billion stronger than forecast. This improvement was driven by positive valuation movements in financial instruments of $6.9 billion, however this was partially offset by unfavourable valuation movements on non‑financial instruments of $3.4 billion.

The core Crown residual cash deficit of $15.6 billion was higher than the forecast deficit by $1.5 billion. This was largely a result of net core Crown operating cash outflows being $1.6 billion higher than forecast (unfavourable), mainly because of weaker tax receipts.

Net core Crown debt at $171.9 billion (42.4% of GDP) was higher than forecast by $0.6 billion, largely due to the core Crown residual cash deficit. This was partly offset by a variety of factors such as valuation gains and accrued interest.

In the 2024 Budget Policy Statement, the Government announced a change in the headline debt indicator from net debt to net core Crown debt for monitoring their progress towards their fiscal objectives. The previous headline debt indicator, net debt has still been published in the Fiscal Indicator Analysis section of the interim Financial Statements of the Government.

Gross debt at $166.8 billion (41.2% of GDP), was $5.4 billion more than forecast due to additional borrowings to manage the Crown’s short-term liquidity requirements. Short term borrowings were $5.5 billion above forecast, with Euro Commercial Paper being $6.6 billion higher than forecast and Treasury Bills $1.1 billion lower.

Net worth attributable to the Crown was $184.0 billion which was $3.6 billion higher than forecast. This was largely driven by the variance in the operating balance result.