Financial Statements of the Government of New Zealand for the Four Months Ended 31 October 2009

The Financial Statements of the Government of New Zealand for the four months ended 31 October 2009 were released by the Treasury today.

The monthly financial statements are compared against monthly forecast tracks based on the 2009 Budget Economic and Fiscal Update.

Results for the four months ended 31 October 2009

* Core Crown tax revenue at $15.4 billion was $1.6 billion (or 9.4 per cent) lower than forecast, while cash receipts of $15.9 billion were $240 million (or 1.5 per cent) below forecast. A large portion of the underlying revenue variance was caused by lower-than-expected net terminal tax related to lower-than-expected 2009 tax year business profitability. Indications suggest that lower 2009 profitability will flow through to lower-than-expected 2010 tax revenue than was forecast at Budget 2009.

Excluding a large payment made into tax pools that boosted corporate tax receipts in July, underlying tax receipts were also tracking below forecast.

* Higher-than-forecast investment returns reported by the NZS Fund and ACC ($1.3 billion and $0.6 billion respectively) were partly offset by investment losses by the Reserve Bank and an actuarial loss on the ACC claims liability. Overall, net gains were $1.3 billion higher than forecast which, when offset against the lower tax revenue, resulted in the operating deficit being on target.

* The Crown’s gross debt holdings of $48.2 billion (equivalent to 26.8 per cent of GDP) was $713 million higher than forecast, primarily as a result of an increase in the funds New Zealand is obliged to set aside as special drawing rights with the International Monetary Fund.

* Other key indicators were largely on target.

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ENDS

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