Government accounts still on track for surplus

The Government’s books are forecast to be back in surplus in 2024/25 reflecting a resilient economy in the face of a global economic downturn.

“There’s no doubt the global economy is headed for a rough ride over the next year, and New Zealand will not be immune from the impact of that. We face this with a strong starting point of low unemployment and low public debt as we have managed the books carefully,” Grant Robertson said.

The Treasury today released its latest economic and fiscal forecasts in the 2022 Half Year Economic and Fiscal Update.

The Operating Balance before Gains and Losses (OBEGAL) deficit is forecast to shrink further this year and expected to be close to a balance position in 2023/24, and return to surplus in 2024/25.

Net debt is forecast to peak at 21.4 percent of GDP in 2023/24 and then fall to 14.1 percent by the end of the forecast period.

“We are continuing to manage the Government finances carefully by reprioritising savings, setting aside money for future investments while getting the books back into surplus,” Grant Robertson said.

“Savings identified from unspent funding has taken pressure off debt, and allowed some of it to be redirected to important priorities, like the money to pay for the fuel tax cut, half price public transport and Cost of Living Payment. As we have the entire time we have been in Government, we will continue to support New Zealanders through good times and bad.”

The Treasury predicts economic growth will slow through 2023 with a mild contraction over three quarters before a gradual recovery in 2024 and beyond.

It also says the Government’s strategy of reducing deficits and returning the books to surplus by 2024/25 is helping to reduce demand pressure in the economy and supporting monetary policy to stabilise prices.

“Getting the books back in the black will help to keep a lid on debt and take inflation pressure out of the economy, giving businesses more space to invest,” Grant Robertson said.