Cash flow due to GST seasonal effects

The increase in the cash flow position in the January accounts reflects GST timing issues.

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11 March 2005

Cash flow increase due to GST seasonal fluctation

The strong improvement in net cash flow between December and January, evident in the latest Crown Financial Statements, reflects GST timing issues and was expected, Finance Minister Michael Cullen said today.

He was commenting on the increase in the cash position from $91 million at the end of December to $1.775 billion at the end of January.

Dr Cullen said the figure jumped every year at this time because, owing to the disruptions created by Christmas and the New Year, there is no GST due date in December but two in January.

"Of more significance is that the January result is running close to forecasts indicating that we are broadly on track to achieve Treasury's full year forecast of $1.4 billion.

"This money will be needed to help fund the government's borrowing programme over the next two years given that the December Economic and Fiscal Update is forecasting cash deficits in 2005-06 and 2006-07 of around $700 million and $1.55 billion respectively," Dr Cullen said.

He said that although both the operating balance and the Oberac were running above forecast, this would have little effect on the government's ultimate financing requirement.

This was because most of the variance was either due to temporary factors [deferred spending still to come on to the books this year] or non-cash components [unrealised investment gains in the GSF, New Zealand Superannuation Fund and ACC or State Owned Enterprise surpluses which would be retained by the SOE.]

ENDS

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