[Full release with chart and Financial Statements: mediareleasefsgnz7mthsjan14.pdf]

11 March 2014
MEDIA STATEMENT
Embargoed until 10.00am, Tuesday 11 March 2014

Fergus Welsh
Acting Chief Government Accountant
The Treasury

Financial Statements of the Government of New Zealand for the Seven Months Ended 31 January 2014

The Financial Statements of the Government of New Zealand for the seven months ended 31 January 2014 were released by the Treasury today. These statements are compared against forecasts based on the Half Year Economic and Fiscal Update (HYEFU), released on 17 December 2013.

The operating balance before gains and losses (OBEGAL) was in deficit by $1.1 billion, which was $637 million more than expected, mainly due to lower core Crown tax revenue across most tax types. This result was partially offset by lower core Crown expenses and higher returns from Crown Entities.

At this stage, it is difficult to determine how much of the lower than forecast tax is temporary versus permanent but we expect this to become clearer over the next few months. Timing issues are likely to see some of the current variance narrow by year end.

Factors contributing to these timing issues include mismatching in the timing of GST refunds and receipts relating to both export products and the Canterbury rebuild, as well as tax revenue from some large corporate taxpayers not yet being visible to the IRD owing to their use of tax pooling schemes.

Following on the trend in recent months, continued strength in equity markets saw gains recorded on financial instruments of $2.8 billion, which was $1.3 billion ahead of forecast.

As a result, the operating balance surplus was $629 million higher than forecasts at $3.4 billion.

Net debt was $631 million higher than forecast at $59.9 billion or 27.7% of GDP. This was primarily due to a higher than forecast residual cash deficit driven by lower than expected core Crown tax receipts and higher than expected operating payments. Delays in insurance proceeds being returned to the core Crown also contributed to the higher than forecast residual cash deficit.

At 31 January, total Crown assets were $246.9 billion and liabilities were $171.8 billion and the Crown’s share of net worth strengthened to $70.6 billion.

[Full release with chart and Financial Statements: mediareleasefsgnz7mthsjan14.pdf]

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