The interim Financial Statements of the Government of New Zealand for the five months ended 30 November 2021 (the financial statements) were released by the Treasury today.
The November results are reported against forecasts based on the Half Year Economic and Fiscal Update 2021 (HYEFU 2021), published on 15 December 2021.
Most key fiscal indicators were relatively close to forecast, with core Crown tax revenue and core Crown expenses having favourable variances to forecast of $0.3 billion and $0.4 billion respectively.
|Year to date||Full Year|
|Core Crown tax revenue||41,129||40,877||252||0.6||102,561|
|Core Crown revenue||44,609||44,366||243||0.5||110,733|
|Core Crown expenses||52,751||53,157||406||0.8||128,028|
|Core Crown residual cash||(16,815)||(17,321)||506||2.9||(34,100)|
|Net core Crown debt4||118,444||119,026||582||0.5||136,305|
|as a percentage of GDP||34.5%||34.6%||37.6%|
|as a percentage of GDP||34.0%||33.5%||31.4%|
|Operating balance before gains and losses||(8,353)||(9,589)||1,236||12.9||(20,844)|
|Operating balance (excluding minority interests)||(12,702)||(14,968)||2,266||15.1||(23,826)|
|Net worth attributable to the Crown||138,728||136,063||2,665||2.0||127,282|
|as a percentage of GDP||40.4%||39.6%||35.1%|
- Using the most recently published GDP (for the year ended 30 Sep 2021) of $343,519 million (Source: Stats NZ).
- Favourable variances against forecast have a positive sign and unfavourable variances against forecast have a negative sign.
- Using HYEFU 2021 forecast GDP for the year ending 30 June 2022 of $362,788 million (Source: The Treasury).
- Net core Crown debt excluding student loans and other advances. Net debt may fluctuate during the year largely reflecting the timing of tax receipts.
- Gross sovereign-issued debt excluding settlement cash and Reserve Bank bills.
Core Crown tax revenue for the five months to 30 November 2021 was $0.3 billion (0.6%) above forecast, at $41.1 billion. The variance consists of favourable variances in corporate tax ($0.2 billion), other individuals’ tax and source deductions ($0.1 billion each), offset by customs and excise duties ($0.1 billion below forecast).
Core Crown expenses were $52.8 billion for the five months to 30 November 2021 and $0.4 billion (0.8%) below forecast, comprising of small variances across multiple Departments.
The operating balance before gains and losses (OBEGAL) deficit of $8.4 billion was $1.2 billion lower than the forecast deficit, mainly reflecting the core Crown results discussed above. In addition, the results of Crown entities and State-owned enterprises were stronger than forecast by $0.4 billion and $0.2 billion respectively.
When total gains and losses are added to the OBEGAL result, the operating balance was $12.7 billion in deficit, and $2.3 billion lower than the deficit forecast. This variance reflects movements in external factors (eg, equity markets and discount rates, which can be volatile). The key drivers of the variance in net gains and losses were:
- Net losses on non-financial instruments were $1.6 billion lower than forecast primarily owing to the ACC outstanding claims liability valuation being $1.5 billion lower than forecast. This variance largely reflects changes in discount rates, which are used to value future claims cash flows into present value dollars.
- Net gains on financial instruments were $0.5 billion lower than forecast primarily as a result of returns on the Crown’s investment portfolios (New Zealand Superannuation Fund and ACC), as current market returns were lower than those forecast.
The core Crown residual cash deficit of $16.8 billion was lower than forecast by $0.5 billion. Net operating cash outflows were $0.5 billion higher than forecast, largely as a result of tax receipts which were lower than forecast by $0.4 billion. However, this was more than offset by capital payments which were lower than expected by $1.0 billion, driven by lower than forecast uptake of the Reserve Bank’s Funding for Lending Programme (FLP).
Net core Crown debt was $118.4 billion (34.5% of GDP) at 30 November 2021, below forecast by $0.6 billion mostly due to the core Crown residual cash variance. When FLP advances are included, net core Crown debt was $112.4 billion (32.7% of GDP).
Gross debt at $116.9 billion (34.0% of GDP) was $1.9 billion higher than forecast. This is in part owing to the Reserve Bank’s Bond Lending Facility repurchases, which were $0.7 billion higher than forecast, as well as an issuance of $0.8 billion of euro-commercial paper, which was not forecast. The majority of this variance has a corresponding impact on financial assets and therefore does not impact on net core Crown debt.
Net worth attributable to the Crown was $138.7 billion at 30 November 2021, $2.7 billion higher than forecast. Most of this variance relates to the favourable operating balance discussed above.
EnquiriesTreasury Communications Team
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