Paul Helm, Chief Government Accountant
The Financial Statements of the Government of New Zealand for the seven months ended 31 January 2016 were released by the Treasury today. The statements are compared against forecasts based on the 2015 Half Year Economic and Fiscal Update (HYEFU) published in December.
The operating balance before gains and losses (OBEGAL) was a surplus of $934 million for the seven months to 31 January, $724 million higher than forecast.
Core Crown revenue at $42.5 billion was $200 million higher than forecast with higher than expected core Crown tax revenue (mainly GST and source deductions) being the main contributor to this favourable variance. In addition to this result, core Crown expenses, at $42.1 billion, were $403 million (0.9%) lower than forecast primarily due to timing differences relating to items such as Treaty settlements.
Net losses were $3.5 billion higher than forecast due to higher than expected actuarial losses on the ACC claims liability (reflecting the impact of changes in valuation assumptions used compared to forecast) and higher than expected losses on financial instruments due to unfavourable market conditions in January. Both ACC and NZSF have large long term assets and liabilities that are revalued each month based on current market prices which can result in significant monthly volatility in gains and losses.
When these gains and losses are combined with the OBEGAL result, the operating balance (excluding minority interests) was a deficit of $2.9 billion ($2.8 billion greater than forecast).
The core Crown residual cash position, at a deficit of $1.5 billion, was $1.0 billion lower than forecast resulting in net debt also being lower than forecast at $61.8 billion (25.4% of GDP).
At 31 January 2016, total Crown assets were valued at $275.7 billion and liabilities were $186.5 billion while the Crown’s share of net worth stood at $83.4 billion.
The current OBEGAL surplus of $934 million compared to a surplus of $77 million at the same time last year. Core Crown tax revenue has increased by 4.6%, while core Crown expenses have grown by 2.2%, over that time.
|$ million||Year to date||Full Year|
|Core Crown tax revenue||39,528||39,082||446||1.1||68,414|
|Core Crown revenue||42,544||42,344||200||0.5||74,338|
|Core Crown expenses||42,147||42,550||403||0.9||74,911|
|Core Crown residual cash||(1,452)||(2,500)||1,048||41.9||(5,398)|
|as a percentage of GDP||35.2%||35.4%||35.6%|
|as a percentage of GDP||25.4%||25.8%||26.9%|
|Operating balance before gains and losses||934||210||724||344.8||(401)|
|Net worth attributable to the Crown||83,431||86,371||(2,940)||(3.4)||86,862|
- Using the most recently published GDP (for the year ended 30 September 2015) of $243,803 million (Source: Statistics New Zealand).
- Using forecast GDP for the year ending 30 June 2016 of $244,923 million (Source: Treasury).
- Gross sovereign-issued debt excluding settlement cash and Reserve Bank bills.
- Net core Crown debt excluding student loans and other advances. Net debt may fluctuate during the year largely reflecting the timing of tax receipts.
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