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Source: MIL-OSI Submissions

Source: New Zealand Treasury
The October results are reported against forecasts based on the Budget Economic and Fiscal Update 2021 (BEFU 2021), published on 20 May 2021.The increase in COVID-19 Alert Levels and the community transmission of COVID-19 resulted in a number of government fiscal support measures increasing core Crown expenses which were higher than forecast by $4.9 billion.
Core Crown revenue was $3.0 billion higher than forecast which partially offset the increase in expenses. As a result, both the operating balance before gains and losses (OBEGAL) deficit and residual cash deficit were higher than forecast.
Year to date Full Year
October
2021
Actual1
$m
October
2021
BEFU 2021
Forecast1
$m
Variance2
BEFU 2021
$m
Variance
BEFU 2021
%
June
2022
BEFU 2021
Forecast3
$m
Core Crown
Core Crown tax revenue 31,793 29,337 2,456 8.4 93,188
Core Crown revenue 34,604 31,618 2,986 9.4 99,778
Core Crown expenses 41,861 36,937 (4,924) (13.3) 114,717
Core Crown residual cash (14,231) (10,809) (3,422) (31.7) (39,232)
Net core Crown debt4 116,126 124,634 8,508 6.8 153,311
as a percentage of GDP 34.2% 36.7% 43.8%
Gross debt5 115,174 95,472 (19,702) (20.6) 95,943
as a percentage of GDP 33.9% 28.1% 27.4%
Total Crown
Operating balance before gains and losses (7,762) (5,926) (1,836) (31.0) (18,409)
Operating balance (excluding minority interests) (11,026) (5,162) (5,864) (113.6) (15,648)
Total borrowings 183,754 180,540 (3,214) (1.8) 215,234
Net worth attributable to the Crown 139,921 106,919 33,002 30.9 96,551
as a percentage of GDP 41.2% 31.5%     27.6%
  1. Using the most recently published GDP (for the year ended 30 June 2021) of $339,603 million (Source: Stats NZ).
  2. Favourable variances against forecast have a positive sign and unfavourable variances against forecast have a negative sign.
  3. Using BEFU 2021 forecast GDP for the year ending 30 June 2022 of $349,742 million (Source: The Treasury).
  4. Net core Crown debt excluding student loans and other advances. Net debt may fluctuate during the year largely reflecting the timing of tax receipts.
  5. Gross sovereign-issued debt excluding settlement cash and Reserve Bank bills.

Core Crown tax revenue for the four months to 31 October 2021 was $2.5 billion (8.4%) above the BEFU 2021 forecast, with positive variances across most tax types, specifically, corporate tax ($1.2 billion), other individuals’ tax ($1.0 billion) and source deductions revenue ($0.6 billion). These positive variances reflect economic conditions being better than forecast.

Core Crown expenses were $41.9 billion, $4.9 billion or (13.3%) above forecast, mainly owing to the reappearance of COVID-19 which triggered a number of fiscal support measures. As a result, wage subsidies and COVID-19 resurgence support payments were $3.6 billion and $1.3 billion respectively higher than forecast.

The operating balance before gains and losses (OBEGAL) was a $7.8 billion deficit, $1.8 billion higher than forecast deficit of $5.9 billion, mainly reflecting the core Crown results discussed above.

When net gains and losses are added to the OBEGAL result, the operating balance was a $11.0 billion deficit, and $5.9 billion higher than the deficit forecast. Net losses were $3.7 billion higher than expected due to losses of $3.0 billion recognised on the Emissions Trading Scheme liability and an increase in the ACC insurance liability of $0.9 billion.  The increase in the Emissions Trading Scheme liability is due to the increase in carbon prices while changes in inflation and discount rates have driven the changes in the ACC insurance liability.

The core Crown residual cash deficit of $14.2 billion was $3.4 billion more than forecast, mainly due to increased transfer payments and subsidies ($4.6 billion above forecast) which were partly offset by net core Crown capital cash flows being $1.1 billion lower than forecast and sovereign receipts being $0.6 billion higher than forecast.

Net core Crown debt was $116.1 billion (34.2% of GDP) at 31 October 2021, $8.5 billion lower than forecast. This was largely owing to the favourable variance from the 30 June 2021 results of $11.6 billion, which was partly reduced by the core Crown residual cash variance.

Gross debt at $115.2 billion (33.9% of GDP), was $19.7 billion higher than forecast mainly owing to increases in Government bonds due to the suspension of the Large-Scale asset purchases (LSAP) programme from July 2021, offset by slightly lower than forecast bond issuances.

Net worth attributable to the Crown at $139.9 billion (41.2% of GDP) was $33.0 billion higher than forecast. Most of this variance relates to the 30 June 2021 results variance of $39.5 billion partly offset by the operating balance variances discussed above.

MIL OSI