Govt accounts show surplus above forecast, net debt lower than expected

The Government’s accounts continued to track slightly better than expected in the eight months to the end of February, with the Government surplus nearly $500 million higher than the Treasury forecast in December, Finance Minister Grant Robertson says.

“The latest financial statements show that the Coalition Government is sticking to the Budget Responsibility Rules, which require us to run a sustainable surplus, keep net debt on track to fall to 20% of GDP in 2022 and to ensure that we manage Government spending responsibly by keeping it in line with previous governments,” Grant Robertson says.

“A strong jobs market this year has meant employment growth has been higher in recent months than the Treasury expected, meaning PAYE is above forecast. Greater residential investment and private consumption have boosted GST receipts, while a rise in customs and excise duties have also contributed to core Crown tax revenue coming in $692 million better than expected.

“The Treasury has said that most of the positive variance in revenue is expected to remain through the rest of the year. This reflects underlying economic conditions, with surveys of business and consumer confidence pointing to sustainable growth rates of about 3% over the next few years for the New Zealand economy.

“Core Crown expenses were close to forecast in the eight months to February. The operating balance before gains and losses was $2.85 billion, which was $494 million above what the Treasury had forecast in December. The surplus is $1.4 billion higher than the same time last year.”

Meanwhile, core Crown net debt at the end of February was 21.1% of GDP, which was below the 21.7% expected by the Treasury at the Half Year Economic and Fiscal Update in December 2017.

“The Coalition Government has committed to a responsible debt track, reducing net debt to 20% of GDP within five years of taking office. This is two years slower than the previous government to give us room to make essential investments required to bring our core public services up to the standards New Zealanders expect and deserve,” Grant Robertson says.