The interim Financial Statements of the Government of New Zealand for the nine months ended 31 March 2022 (the financial statements) were released by the Treasury today.
The March results are the last to be reported against forecasts based on the Half Year Economic and Fiscal Update 2021 (HYEFU 2021), published on 15 December 2021. The April results will be compared against the monthly forecast track based off the 2022 Budget Economic and Fiscal Update (BEFU 2022), due to be released on 19 May 2022.
|Year to date||Full Year|
|Core Crown tax revenue||78,620||75,941||2,679||3.5||102,561|
|Core Crown revenue||85,159||81,937||3,222||3.9||110,733|
|Core Crown expenses||92,596||92,732||136||0.1||128,028|
|Core Crown residual cash||(24,698)||(24,857)||159||0.6||(34,100)|
|Net core Crown debt4||127,170||127,325||155||0.1||136,305|
|as a percentage of GDP||36.3%||36.4%||37.6%|
|as a percentage of GDP||33.6%||32.8%||31.4%|
|Operating balance before gains and losses||(8,111)||(12,205)||4,094||33.5||(20,844)|
|Operating balance (excluding minority interests)||(15,586)||(16,314)||728||4.5||(23,826)|
|Net worth attributable to the Crown||136,414||135,024||1,390||1.0||127,282|
|as a percentage of GDP||39.0%||38.6%||35.1%|
- Using the most recently published GDP (for the year ended 31 December 2021) of $350,083 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.
The Minister of Finance, on Tuesday 3 May 2022 announced the new measure for net debt. This will be first reported against the results for the period ended 30 April 2022.
Core Crown tax revenue for the nine months to 31 March 2022 was $2.7 billion (3.5%) above forecast, at $78.6 billion. The key drivers were positive variances in corporate tax ($1.8 billion), net other individuals’ tax ($1.0 billion) and source deductions ($0.8 billion). This was slightly offset by GST revenue and customs and excise duties being $0.6 billion and $0.3 billion below forecast respectively.
Core Crown tax receipts, however, are in line with forecast.
The main driver between the difference in the receipts and revenue variance is a revenue estimation uplift factor of close to 10% used for the 2022 tax year, whereas taxpayers’ payments will generally be using a 5% uplift. It is expected that the variance will be closer by the end of the fiscal year, however, there remains a risk that some payments may fall into the 2022/23 fiscal year, when terminal tax is due.
Core Crown expenses at $92.6 billion, were close to forecast.
The operating balance before gains and losses (OBEGAL) deficit of $8.1 billion was $4.1 billion better than forecast, mainly reflecting the core Crown results discussed above. The results of Crown entities and State-owned Enterprises were also stronger than expected.
When total gains and losses are added to the OBEGAL result, the operating balance was an $15.6 billion deficit, and the variance narrows to $0.7 billion. The key drivers of the net gains and losses variance were:
- Net losses on financial instruments were $4.1 billion lower than the gains forecast, largely due to returns on the Crown’s investment portfolios (New Zealand Superannuation Fund and ACC).
- Net losses on non-financial instruments were $1.0 billion lower than the losses forecast, primarily due to the ACC outstanding claims liability valuation loss being $2.4 billion less than forecast due to changes in the actuarial assumptions used to calculate the claims liability. This is partially offset by the losses on the Emissions Trading Scheme liability being $1.6 billion higher than the loss forecast due to changes in the carbon price.
The core Crown residual cash deficit of $24.7 billion was close to forecast reflecting the operating results and difference between tax revenue and receipts discussed above.
Net core Crown debt was $127.2 billion (36.3% of GDP) at 31 March 2022, also in line with forecast reflecting the core Crown residual cash variance described above.
Gross debt at $117.6 billion (33.6% of GDP) was $2.9 billion higher than forecast. This is owing to repurchases of government stock being $1.2 billion below forecast and the issuance of $1.8 billion of euro-commercial paper (which was not forecast).
Total borrowings were $197.1 billion, higher than forecast by $7.6 billion. The increase is largely owing to the variance in gross debt above and the higher level of settlement deposits held with the Reserve Bank ($6.1 billion).
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