Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

DEFU & BPS Key Points

Data Flash (New Zealand)

December Economic and Fiscal Update (DEFU) and Budget Policy Statement (BPS) Key Points

- The total additional funding requirement for 2001/02 is 1.1bn as the Government looks to cover a cash flow shortfall resulting from the funding of the Air New Zealand rescue package.

- Around $500m of the additional funding is achieved by retaining bonds issued previously with the intention that they be swapped. A further $500m of the additional funding requirement is obtained from the overfunding of the 2000/01 requirement (the actual outturn was better than expected at Budget time). This leaves a residual of $100m to be funded by additional NZD bonds.

- However, given the step up in the funding needs for 2002/03 (discussed below) the Government as decided to pre-fund next year's requirement to the tune of $500m in the current fiscal year. As a result, this year's bond tender programme has been increased by $600m to $4.1 bn (see attached table for revised dates - one additional tender has been scheduled).

- This means that a further $2.3bn of funding will be sought in the first 6 months of 2002. In addition, the tendering of the Governnment Superannuation Fund's portfolio will contribute additional supply. As a partial offset, the March 2002 bond will mature (2bn remaining on issue).

- The projected bond programme for the out years - already large due to debt refinancing, higher capital expenditure and the need to fund the Government's new superannuation fund - has also been revised up, largely due to downward revisions to the Treasury's projections of economic growth. An additional of $600m of issuance is projected for 2002/03 and $700m of for 2003/04.

- The Treasury expects the economy to expand 3.1% in 2001/02. Therafter, growth of 1.9% is expected in 2002/03 down from the 3.3% growth expected previously, reflecting the impact of the global slowdown, before rebounding to 3.7% in 2003/04. The Treasury forecasts for 2004/05 and 2005/06 suggest an assumed trend growth rate of 2.7% (A table summarising the economic and fiscal projections is presented next page.)

- The change in growth profile is reflected in the fiscal projections. The Treasury now anticipates a fiscal surplus (excluding revalations and accounting adjustments) of $1.2bn for the year ended June 2002 - just a little below the Budget projection. However, the shortfall grows to $0.6bn in the 2003 fiscal year. As the economy rebounds, the fiscal surplus is forecast to return close to Budget projections.

- The Treasury forecasts inflation to steadily fall over the next years, to 1.3% yot in Q1 2003. Thereafter, inflation is expected to remain close to the centre of the RBNZ's target range (ie 1.5% yoy).

- The current account deficit is forecast to fall to 3.1% of GDP by March 2002 before rising gradually to 4.0% of GDP over subsequent years.

- The Treasury's forecasts are predicated on the view that the Reserve Bank's 90 day bank bill rate averages 4.8% in March 2002 (consistent with the OCR remaining at its current level of 4.75%), rising to 5.8% in March 2003 and 6% thereafter. The TWI is assumed to appreciate gradually to 55.0 by March 2005.

- The Government remains committed to maintaining operating surpluses over the course of the economic cycle and to maintaining gross debt of 30% of GDP consistent with net debt below 20% of GDP, but prgress towards that goal is expected to be a little slower than the Government previously projected.

- The 2002/03 Budget will give priority to spending on health and education, as well as assisting industry development/transformation.

Ends


© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 


Statistics: Annual Inflation Hits A Three-decade High At 5.9 Percent
The consumers price index increased 5.9 percent from the December 2020 quarter to the December 2021 quarter, the biggest movement since a 7.6 percent annual increase in the year to the June 1990 quarter, Stats NZ said today... More>>



Digitl: Bumper year ahead for NZ IT sector

Gartner says New Zealand spending on technology products and services will grow 7.4 percent this year. The company’s latest forecast says the market will total NZ$15.3 billion in 2022... More>>



Fonterra: Lifts Forecast Farmgate Milk Price Range

Fonterra Co-operative Group today lifted its 2021/22 forecast Farmgate Milk Price range to NZD $8.90 - $9.50 per kgMS, up from NZD $8.40 - $9.00 per kgMS. This increases the midpoint of the range, which farmers are paid off... More>>



Skoltech: Study Probes Earth’s Turbulent Past To Explain Where Oceans Came From

The origin of water on our planet is a hot question: Water has immense implications for plate tectonics, climate, the origin of life on Earth, and potential habitability of other Earth-like planets. In a recent study in Physical Review Letters, a Skoltech professor and his Chinese colleagues suggest... More>>


Statistics: Household Net Worth Grows In The September 2021 Quarter But At A Slower Pace Compared To March 2021

Household net worth grew by $60.7 billion in the September 2021 quarter compared with the June 2021 quarter, Stats NZ said today. This represents an increase of 2.5 percent, a similar result to the June 2021 quarter, which was up $60.6 billion or 2.6 percent... More>>

TradeMe: Job Market Ends 2021 On A High With Record Number Of Vacancies
The New Zealand job market finished 2021 on a high note, with the ball still firmly in the job hunters’ court, according to the analysis of 69,600 vacancies listed on Trade Me Jobs for the quarter ending 31 December (Q4)... More>>