Government deficit improves

VERNON SMALL
Last updated 10:14 25/01/2013

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The Government's deficit is tracking lower than expected thanks mainly to stronger returns from investments in the New Zealand Superannuation Fund and ACC.

Treasury today released results for the Crown accounts for five months to the end of November that showed the operating balance was $706 million in surplus - $1.2 billion better than the $515m deficit forecast in the pre-Christmas half year update.

The deficit before gains and losses was $3b, $200m better than expected.

Treasury said core Crown tax revenue at $22.5b was close to forecast, $127m (0.6 per cent) higher than expected, with all tax types broadly in line with forecast.

Core expenditure was also close to forecast at $28.8b (up 0.1 per cent on forecast).

The residual cash deficit was $200m below forecast at $6b owing to higher than expected tax receipts ($210m or 1 per cent above forecast).

GST contributed $187m of the additional receipts but this was most likely due to timing of payments and the increase was expected to reverse in coming months.

Net debt at $56.4b (27.1 per cent of gross domestic product) was $317m below forecast, largely because of the lower residual cash deficit, while gross debt was on forecast at $82.4b, or 39.6 per cent of GDP.

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