The New Zealand government turned to a deficit in the first eight months of the financial year, although the shortfall was smaller than forecast as the Crown took in more tax and costs came in below its estimate.
The operating balance before gains and losses (Obegal) was a deficit of $269 million in the eight months ended Feb. 28, compared to a forecast deficit of $612 million, the Treasury said in a statement. That was due to a bigger than expected tax-take of $42.4 billion in the period, some $162 million ahead of forecast, while core Crown expenses were $312 million below forecast at $47.2 billion, which was spread across a number of government departments.
The Treasury said the Obegal fluctuates on a monthly basis because of the seasonal nature of some tax revenue and expenses. The government's financial adviser has pushed out a forecast return to surplus until the 2016 financial year as persistently low interest rates erode the revenue from withholding taxes, lower-than-expected household spending saps goods and services tax, and weak inflation keeps a lid on wages and income tax. The Treasury forecast an Obegal deficit of $572 million in the year ending June 30, 2015, turning to a surplus of $565 million the following year.
The bigger than expected tax-take came from other individual taxes coming in $217 million ahead of forecast and company tax coming in $91 million ahead of the estimate. these were partly offset by GST coming in $261 million below forecast, mainly reflecting higher-than-expected earthquake related refunds and weaker-than-expected growth in consumption, the Treasury said.
The operating balance was a deficit of $952 billion, compared to a forecast surplus of $941 million. That reflected net losses on non-financial instruments - mainly actuarial losses on ACC and GSF liabilities - that were $4.3 billion more than expected, partly offset by net gains on financial instruments coming in $1.7 billion higher than forecast.
The government's net debt was $63.5 billion, or 26.7 percent of gross domestic product, as at Feb. 28, $700 million below forecast, while gross debt of $87.5 billion, or 36.8 percent of GDP, was $3.5 billion more than expected. The Crown's residual cash deficit was $3.7 billion, or $428 million better than expected.
As at Feb. 28, total Crown assets were valued at $263.5 billion, and liabilities at $183.7 billion and the Crown's share of net worth stood at $74.6 billion.