Strong economic position reflected in Crown accounts

The strength of the economy is continuing to be reflected in the Crown accounts and shows New Zealand is well positioned to support New Zealanders to manage the impacts of the challenging global economic environment, Grant Robertson said.

For the ten months to the end of April, the Operating Balance before Gains and Losses (OBEGAL) deficit was $9.4 billion, $3.2 billion below that forecast in May’s Budget 2022.

“This result shows the strong position New Zealand finds itself in despite a highly uncertain global environment dominated by high levels of inflation caused by the Ukraine war, the ongoing pandemic and supply chain disruptions. Our strong economic management has meant that we have navigated COVID to be in a far better position than many other countries to deal with the challenges that lie ahead,” Grant Robertson said.

“We know this is a difficult time for families and business who are doing it tough in the face of rising costs. But we face these pressures with record low unemployment, good growth levels, and lower debt than most as we look to secure our economic future.” 

Tax revenue was $1.8 billion above forecast at $87.9 billion, due to better-than-expected corporate profits and a strong jobs market with more people in work. This was partly offset by lower GST returns. Core Crown expenses were $0.8 billion below forecast at $102.8 billion.

Using the new debt indicator which brings New Zealand closer in line with other countries, net debt is at 18 percent of GDP compared with a forecast of 16.7 percent of GDP.

“As I noted when we announced the new debt indicator, the inclusion of a wide range of government assets such as the New Zealand Superannuation Fund is likely to add more volatility to the level of net debt in the near term. In this case, the difference is mainly due to market conditions affecting the NZ Super Fund’s investment portfolio,” Grant Robertson said. 

“Under the old debt measure, which looks through the variability created by the inclusion of the NZ Super Fund, net core Crown debt stood at 37.5 percent of GDP, $1.13 billion above forecast.

“Our economy has come through the Covid shock better than almost anywhere else. The economy is bigger than before the pandemic, unemployment is at a record low and exports are growing. The recovery is gaining momentum and the easing of restrictions and opening up to skilled workers and tourists will help business and the economy rebuild.

“2022 continues to be a challenging year for many New Zealanders facing the impact of global inflation and our resilience will continue to be tested. Nevertheless, our fiscal position is strong and our debt is substantially below most other nations. We are one of a handful of countries which have a Triple A credit rating from the leading rating agencies and our strong economic management has also been recognised by the OECD and IMF.

“We are taking a balanced approach; controlling spending and targeting it at those who need it most, keeping a lid on debt and able to make important investments in our future such as in health and infrastructure,” Grant Robertson said.