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Treasury Financial Statements to Nov 05

Financial Statements Of The Government For The Five Months Ended 30 November 2005

The Financial Statements of the Government of New Zealand for the five months ended 30 November 2005 were released by the Treasury today. These financial statements are compared against monthly forecasts based on the 2005 Half Year Economic and Fiscal Update (Half Year Update). The forecasts for the Half Year Update were based on actual results to 31 October.

$ million November November

2005 2005 Variance June 2006 June 2005

Actual YTD Forecast YTD $m Forecast Actual

Net cash flow from core operating and investing activity 490 271 219 492 3,104

Gross sovereign-issued debt 35,939 34,809 1,130 33,275 35,045 % of GDP 23.6 22.8 0.8 20.9 23.2

Net core Crown debt 9,068 9,740 (672) 10,597 10,771 % of GDP 5.9 6.4 (0.5) 6.7 7.1

Total Crown debt 38,713 37,397 1,316 36,054 36,864

Operating balance 5,647 4,270 1,377 5,557 6,247

OBERAC 4,629 4,270 359 5,924 8,873

Net worth 55,637 54,260 1,377 55,555 49,983

The operating balance of $5.6 billion was higher-than-forecast by $1.4 billion. This largely reflects:

• investment income being around $1.3 billion higher-than-forecast, mainly driven by:

- the gain on sale of Southern Hydro by Meridian Energy of around $0.6 billion (as a matter of policy the Half Year Update does not predict such gains); and

- the investment returns of the NZS Fund of around $0.3 billion and GSF of around $0.1 billion (which in both cases returns were above those normally achieved);

• tax revenue being around $0.1 billion higher-than-forecast; and

• delays in departmental spending of around $0.2 billion, from the phased forecasts they have advised as part of the Half Year Update.

The OBERAC was $4.6 billion, which was around $1.0 billion lower than the operating balance. The difference reflects the removal of unrealised investment gains and the gain on sale of Southern Hydro recognised by Meridian Energy.

Gross sovereign-issued debt (GSID) was $35.9 billion (23.6% of GDP) which was around $1.1 billion higher than forecast mainly due to higher than forecast borrowings by the Reserve Bank, which was net debt neutral as financial assets have also increased by a similar amount.

Net core Crown debt was $9.1 billion which was lower than forecast by $0.7 billion. This largely reflects the higher than forecast cashflows from operating and investing activities.

Net cash flow from core operating and investing activity (released on 22 December 2005) was $0.5 billion, $0.2 billion higher than forecast. This is mainly due to higher than forecast tax receipts, timing delays in subsidies and transfer payments, early payment of dividends and delays in advances.


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