Red ink for Government accounts

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Last updated 10:37 24/01/2014

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The Government's Budget was $400 million further in the red than forecast at the end of November, Treasury said today.

The operating deficit before gains and losses was $2.3 billion for the first five months of the financial year show.

Officials said the variation was mainly due to tax revenue being $514m lower than expected but that was tipped to reverse in coming months.

Continued strength in share markets around the world saw big gains for the Government's financial investments of $2.8b, which was $2b ahead of forecast..

That took the operating balance to a surplus of $2.3b - $1.6b higher than forecast. .

Net debt at $59.6b or 27.6 per cent of gross domestic product was close to forecast.

The figures included the sale of Air New Zealand shares which raised $365 million and saw a gain on disposal of about $52m.

When ACC and NZ Superannuation Fund investments in Air NZ are removed from the equation the estimated gain on disposal reduced to $46m.

Finance Minister Bill English said the books were still on track to reach surplus in the 2014-15 year, "but, as we have said many times before, this remains quite a challenge" .

"In particular, we need to remain focused and disciplined and now is certainly not the time to get loose with spending and fiscal policy - as some political parties are advocating," he said.

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