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Govt Financial Statements for 7 Months to 31 Jan

Financial Statements Of The Government For The Seven Months Ended 31 January 2003

The Financial Statements of the Government of New Zealand for the seven months ended 31 January 2003 were released by the Treasury today. These financial statements have been prepared on the basis of fully consolidating all the revenues, expenses, assets and liabilities of all departments, SOEs and Crown entities.

These financial statements are compared against forecasts based on the 2002 December Economic and Fiscal Update (2002 DEFU).

Actual $million - Forecast $million - Annual Forecast $million

Operating balance (surplus) 2,450 1,713 2,505

OBERAC 2,826 1,713 3,521

Crown balance (net worth) 21,251 20,457 21,231

Gross sovereign-issued debt 37,999 37,963 35,522

Net (core) Crown debt 18,452 18,749 18,582

The operating balance for the seven months ended 31 January was $737 million higher-than-forecast. This was due to:

• Tax revenue being $511 million higher-than-forecast, reflecting higher-thanforecast goods and services tax ($219 million) and source deductions($217 million).

• Total Crown expenses being $462 million lower-than-forecast, including lowerthan- forecast core Crown expenses of $358 million. These factors were offset by

• Investment revenues being $396 million lower-than-forecast largely, reflecting reductions in the value of financial investments.

A significant portion of the improvement against forecast in tax revenue and expenses is due to timing and expected to reverse by year-end.

The OBERAC for the seven months ended 31 January was $1,113 million higher than forecast. The difference between OBERAC and the operating balance is the removal of the reductions in the value of financial investments and foreign exchange related movements ($376 million) from the OBERAC calculation.

The improvement in net worth against forecast of $794 million was due to the improved operating balance for 2002/03 and some revaluations of physical assets (which as a matter of policy are not forecast).

Net (core) Crown debt was $297 million lower-than-forecast. This was largely due to improved net cash flows from operations ($391 million), delays in purchases of physical assets ($146 million) and additional issue of circulating currency ($75 million). This was partly offset by the effect of the appreciation in the exchange rate and also higher than forecast diversification from government stock by the Government Superannuation Fund.

Net Crown debt was estimated to be 14.7% of GDP at 31 January, compared to a forecast of 15.0%.

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