The New Zealand government eked out a tiny surplus in the first six months of the fiscal year as growth in domestic consumption lifted the goods and services tax take, while uncertainties over the Kaikoura earthquake costs meant expenses were less than expected.
The operating balance before gains and losses was a surplus of $9 million in the six months ended December, compared with a forecast deficit of $666 million in the Treasury's Half Year Fiscal and Economic Update (HYEFU). That was largely due to core Crown revenue being 0.9% more than forecast at $35.4 billion while core Crown expenses were 0.8% below forecast at $38.1 billion.
The tax take has been rising in an economy which is outpacing many of New Zealand's trading partners.
The Treasury said GST revenue was 1.9%, or $173 million above forecast, "consistent with the higher than forecast growth in domestic consumption through the September quarter".
Core Crown expenses were $303 million less than expected, with the Treasury said mainly reflected "forecast expected costs in relation to the Kaikōura earthquakes which have yet to be quantified with enough certainty to include in the actual results."
"Over time, as reasonable estimates are able to be made, these costs will be recognised in the actual results, reducing the variance," the department said.
The actual operating balance was a surplus of $6.1 billion compared with a HYEFU forecast of $2.47 billion. Net gains in the fiscal first half of $5.9 billion, were $2.9 billion higher than forecast, primarily related to an actuarial gain of $3.1 billion ($2.8 billion higher than forecast) of the ACC liability, the Treasury said.
Core Crown net debt was $65.3 billion, or 25.5% of gross domestic product, largely reflecting higher-than-forecast residual cash deficit, partially offset by the impact of higher than forecast circulating currency, due to increased demand for currency over the Christmas period, leading to an increase in financial assets, it said.
Gross debt was $86.7 billion, or 33.9% of GDP. That was $1.6 billion below forecast and reflected increased repurchasing of government stock.
The net worth attributable to the Crown was $95.5 billion, compared with a HYEFU forecast of $91.9 billion.
In December, the HYEFU reduced the Obegal surplus by $200 million to $473 million for the 2017 fiscal year compared to the May budget before projecting growth of a combined $1.3 billion through to 2020, producing a forecast surplus of $8.5 billion in the year to June 2021.
The Treasury lifted its economic growth forecasts for the next three years, with real gross domestic product now expected to grow 3.6% on an annual average basis in the June 2017 year, up from the 2.9% pace it projected in the May budget. On average, the Treasury expected growth to average 3% a year over the next five years.
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