New Zealand records third fiscal surplus

13 Oct 17

New Zealand has delivered a third fiscal surplus, worth NZ$4.1bn (£2.22bn), but this “should be interpreted with caution”, the country’s finance minister has said.

The operating balance before gains and losses (OBEGAL) was NZ$2.2bn (£1.19bn) stronger than last year.

Finance minister Steven Joyce said these results should not be seen as automatically “flowing through into higher surpluses than forecast in the years ahead”.

He said: “Treasury has based its forecasts on current economic settings and some reasonably solid growth predictions for the years ahead. A number of commentators have noted a softening of growth indicators in recent days.

“This better result should be seen as a one-off. Treasury advises that much of this expenditure reduction reflects timing differences and is likely to reverse out in the years ahead.”

New Zealand’s net debt also reduced by NZ$2.4bn (£1.30bn) from last year, to NZ$59.5bn (£37.17bn). Net debt is now equivalent to 22.2% of GDP.

“This is the first time net debt has reduced in actual dollar terms since the GFC [global financial crisis] and the Christchurch earthquakes,” the finance minister said.

“It’s a significant milestone in the country’s economic recovery from those twin shocks.”

Its tax revenue was NZ$75.6bn (£40.88bn) for the year, up 7.4% from the previous year, the government said.

This tax revenue growth of NZ$5.2bn outpaced the expenditure growth of NZ$2.4bn (£1.30bn).

Joyce said that the results “are a direct demonstration of the hard work of New Zealanders since the global financial crisis and the benefit of a strong economic plan that is delivering consistent growth”.  

The final OBEGAL was NZ$363m (£196.27m) better than the Treasury expected, largely due to core Crown expenditure being NZ$502m (£271.43m) less than predicted.

The finance minister said the government will need to keep reducing debt to “prepare for the next rainy day event” and the government’s future surpluses have to meet the cost of the commitments made under the budgets, including the government’s NZ$32.5bn (£17.57bn)  infrastructure programme.

In its 2017 budget, the country expected a surplus of NZ$1.6bn for the year

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