The interim Financial Statements of the Government of New Zealand for the ten months ended 30 April 2022 (the financial statements) were released by the Treasury today.
The April results are reported against forecasts based on the Budget Economic and Fiscal Update 2022 (BEFU 2022), published on 19 May 2022.
|Year to date||Full Year|
|Core Crown tax revenue||87,940||86,147||1,793||2.1||103,796|
|Core Crown revenue||95,399||93,605||1,794||1.9||112,910|
|Core Crown expenses||102,835||103,603||768||0.7||128,444|
|Core Crown residual cash||(29,652)||(28,648)||(1,004)||(3.5)||(31,780)|
|as a percentage of GDP||18.0%||16.7%||16.9%|
|as a percentage of GDP||33.5%||32.9%||31.8%|
|Operating balance before gains and losses||(9,370)||(12,543)||3,173||25.3||(18,978)|
|Operating balance (excluding minority interests)||(15,661)||(20,812)||5,151||24.8||(27,880)|
|Net worth attributable to the Crown||136,576||131,148||5,428||4.1||123,853|
|as a percentage of GDP||39.0%||37.5%||34.2%|
- 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 BEFU 2022 forecast GDP for the year ending 30 June 2022 of $362,367 million (Source: The Treasury).
- The net debt indicator includes core Crown advances, Crown entity borrowings and the financial assets and borrowings of the New Zealand Super Fund (NZS Fund). Net core Crown debt (the previous headline net debt indicator) was $131.3 billion or 37.5% of GDP. Further information can be found within the box on page 5 of the financial statements.
Core Crown tax revenue for the ten months ended 30 April 2022 was $1.8 billion (2.1%) above forecast, at $87.9 billion. The key drivers were positive variances in corporate tax ($0.9 billion), net other individuals’ tax ($0.6 billion) and source deductions ($0.3 billion). This was slightly offset by GST revenue being $0.1 billion below forecast.
Similar to the trend reported in previous months, core Crown tax receipts are in line with forecast and there remains a risk that some payments from the stronger core Crown tax revenue outturn may fall into the 2022/23 fiscal year, when terminal tax is due.
Core Crown expenses were $102.8 billion, $0.8 billion (0.7%) below forecast mainly reflecting timing delays in spending from Government departments.
The operating balance before gains and losses (OBEGAL) deficit of $9.4 billion was $3.2 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 a $15.7 billion deficit, $5.2 billion better than the deficit forecast.
The key driver of the net gains and losses variance were changes in discount rates, resulting in actuarial gains on the ACC outstanding claims liability that was $5.9 billion higher than the actuarial loss forecast. This was partially offset by weaker market conditions resulting in losses on the Crown’s investment portfolios (New Zealand Superannuation Fund and ACC).
The core Crown residual cash deficit of $29.7 billion was $1.0 billion higher than the deficit forecast. This is mainly due to net core Crown capital cash outflows that were $1.4 billion higher than forecast, partially reflecting the increase in uptake of the Funding for Lending programme.
These are the first interim financial statements to report the Government’s new headline debt indicator – net debt. As at 30 April 2022, nominal net debt was $62.9 billion (18.0% of GDP), $4.3 billion higher than forecast. Most of this variance is driven by unfavourable market conditions impacting the financial portfolio held by the NZSF ($2.2 billion) and Crown entity borrowings ($1.6 billion).
Unlike the previous debt measure (net core Crown debt), the movement in the new measure is influenced by a wider range of factors than residual cash, a box providing more information has been included in the financial statements on page 5.
Gross debt at $117.4 billion (33.5% of GDP), was $2.4 billion higher than forecast. This is owing to movements in derivatives, the issuance of $0.7 billion of euro-commercial paper (that is not forecast) and an increase in collateral liabilities.
Total borrowings were $203.0 billion, higher than forecast by $6.3 billion. The increase is largely owing to the variance in gross debt above, an increase in the value of derivatives in loss held outside of the core Crown and the higher level of settlement deposits held with the Reserve Bank ($1.4 billion).
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