Media statement

Interim Financial Statements of the Government of New Zealand for the seven months ended 31 January 2021

The interim Financial Statements of the Government of New Zealand for the seven months ended 31 January 2021 (the financial statements) were released by the Treasury today.

The January 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 $4.4 billion and continued higher levels of net core Crown debt of $100.4 billion (31.3% of GDP).

  Year to date Full Year
HYEFU 2020
HYEFU 2020
HYEFU 2020
HYEFU 2020
Core Crown          
Core Crown tax revenue 53,585 51,815 1,770 3.4 88,346
Core Crown revenue 57,331 55,558 1,773 3.2 94,993
Core Crown expenses 60,879 61,381 502 0.8 114,232
Core Crown residual cash (12,796) (16,059) 3,263 20.3 (40,177)
Net core Crown debt4 100,364 103,460 3,096 3.0 128,649
as a percentage of GDP 31.3% 32.3%     39.7%
Gross debt5 105,464 100,976 (4,488) (4.4) 91,669
as a percentage of GDP 32.9% 31.5%     28.3%
Total Crown          
Operating balance before gains and losses (4,447) (7,315) 2,868 39.2 (21,576)
Operating balance (excluding minority interests) 3,262 (11,117) 14,379 129.3 (25,639)
Total borrowings 160,500 161,272 772 0.5 186,622
Net worth attributable to the Crown 112,525 98,605 13,920 14.1 83,881
as a percentage of GDP 35.1% 30.7%     25.9%
  1. Using the most recently published GDP (for the year ended 30 September 2020) of $320,746 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 at $53.6 billion was $1.8 billion above forecast largely owing to:

  • GST, corporate tax and source deduction revenue were all ahead of forecast by $0.9 billion (6.5%), $0.7 billion (10.3%) and $0.3 billion (1.5%) 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 $0.3 billion (8.1%) below forecast driven by lower demand for tobacco products resulting in tobacco duty being $0.4 billion (28.9%) lower than forecast.

Core Crown expenses at $60.9 billion were $0.5 billion below forecast mainly owing to lower than forecast social security and welfare spending. This was partly owing to higher than expected repayments of the COVID-19 Wage Subsidy.

OBEGAL was a deficit of $4.4 billion, $2.9 billion better than the forecast deficit, mainly owing to the core Crown results discussed above. When total gains and losses are added to the OBEGAL result, the operating balance (excluding minority interests) was a surplus of $3.3 billion, $14.4 billion greater than forecast. This large variance reflects movements in external factors (eg, market conditions, discount rates and CPI inflation assumptions). The key drivers of the net gains and losses were:

  • Net gains on financial instruments – $4.6 billion higher than forecast primarily as a result of returns on the Crown’s investment portfolios (NZ Superannuation Fund and ACC), as current market returns are higher than those forecast (which used the lower long run rate of return assumptions).
  • Net gains on non-financial instruments – $6.6 billion higher than forecast primarily as a result of ACC’s insurance liability revaluation being $7.1 billion better than forecast. This largely reflects changes in discount rates and CPI assumptions, which are used to value future claims cash flows into present value dollars. The impact of the inflation and discount rate movements are significant due to the long-term nature of this liability, stretching out over 50 years.

Core Crown residual cash was a deficit of $12.8 billion, $3.3 billion smaller than the deficit forecast mainly owing to the cashflow impacts of the core Crown operating results plus a lower than anticipated uptake of advances in relation to the Reserve Bank’s Funding for Lending Programme (FLP).

Net core Crown debt was $100.4 billion (31.3% of GDP) at the end of January 2021, $3.1 billion less than forecast. This was mainly owing to the core Crown residual cash variance of $3.3 billion.

Gross debt at $105.5 billion (32.9% of GDP) was $4.5 billion higher than forecast largely driven by higher government stock and European Commercial Paper (ECP) issuances that were not forecast. Partially offsetting these increases, uptake of the FLP was $1.3 billion lower than forecast.

Net worth attributable to the Crown at $112.5 billion, was $13.9 billion (14.1%) higher than forecast, which primarily reflects the favourable operating balance discussed earlier.



Treasury Communications Team
Email: [email protected]