NZ govt operating deficit smaller than forecast

Article – BusinessDesk

Dec. 6 (BusinessDesk) – The New Zealand government posted a smaller operating deficit than expected in the first four months of the financial year as it reported a bigger personal tax take and reaped more from customs duties on imported tobacco.

NZ govt operating deficit smaller than forecast on higher personal tax take, customs duties

By Paul McBeth

Dec. 6 (BusinessDesk) – The New Zealand government posted a smaller operating deficit than expected in the first four months of the financial year as it reported a bigger personal tax take and reaped more from customs duties on imported tobacco.

The Crown’s operating balance before gains and losses (obegal) was $1.75 billion in the four months ended Oct. 31, smaller than the $2.14 billion forecast in the May Budget economic and fiscal update, and down from a shortfall of $2.87 billion a year earlier. Treasury is scheduled to release updated forecasts on Dec. 17.

Core crown tax revenue was 1 percent ahead of forecast at $19.34 billion, as a bigger take from personal income and larger than expected duties on imported tobacco and exported refined fuel offset a smaller company tax. Core expenses were also 1.1 percent below forecast at $23.32 billion due to delayed spending on the Canterbury earthquakes and Treaty of Waitangi settlements.

“The result continues a trend over the past year of the Government’s fiscal results exceeding forecasts, as we remain on track to return to surplus in 2014/15, Finance Minister Bill English said in a statement.

“Although the economy is improving and revenue is increasing, there are a lot of other large influences on the government’s books. These include a growing prominence of financial assets and liabilities, which expose taxpayers to greater volatility,” he said.

The government’s residual cash deficit of $3.26 billion was smaller than the $3.42 billion forecast in May, with $1.26 billion raised from the sale of instalment receipts in Meridian Energy. Another $627.5 million is payable on May 15, 2015.

Net debt of $59.08 billion, or 27.8 percent of gross domestic product, was slightly lower than the $59.43 billion, or 27.9 percent of GDP, forecast. Gross debt of $82.89 billion, or 39 percent of GDP, was more than the $80.83 billion, or 38 percent of GDP, expected, due to more government bond issuance.

The government’s operating balance, which includes movements in its investment portfolios and actuarial adjustments, was a surplus of $1.83 billion compared to a forecast deficit of $1.47 billion, and compared to a shortfall of $34 million for the same period in 2012.

That was largely due to investment portfolio gains being $1.7 billion ahead of expectations, a $798 million actuarial gain on its Accident Compensation Corp liability and a $539 million gain from its Government Superannuation Fund liability.

Offsetting that was a $210 million loss from the Emissions Trading Scheme due to carbon prices rising to $3.65 as at Oct. 31 from 24 cents at the May budget. The Treasury also lifted its provision for ETS credits to $389 million from the $164 million forecast.

(BusinessDesk)

Content Sourced from scoop.co.nz
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