Sharechat Logo

NZ govt operating deficit smaller than expected; MRP float beats forecast

Friday 5th July 2013

Text too small?

The New Zealand government posted a smaller operating deficit than forecast as the corporate tax take continued to beat expectations, while its cash balance was bolstered by a more successful float of MightyRiverPower than anticipated.

The operating balance before gains and losses (obegal) was a deficit of $3.27 billion in the 11 months ended May 31, smaller than the $4.03 billion shortfall predicted in the Budget Economic and Fiscal Update, according to the Crown's latest accounts. Core tax revenue was 0.9 percent ahead of forecast at $54.01 billion, with higher company taxes offsetting a smaller take on goods and services tax.

Total corporate tax was $491 million ahead of forecast at $8.07 billion, while personal tax was $140 million ahead of expectations at $24.54 billion. GST was $222 million below forecast at $14.03 billion.

"Higher than expected profitability, in part owing to strength in financial markets, contributed to the positive variances and we expect that the differences in core Crown tax revenue will persist to year-end," Treasury chief financial officer Fergus Welsh said in a statement.

The government is sticking to its pledge to return to budget surplus of $75 million in 2015 by putting on a new spending cap and further delaying contributions to the New Zealand Superannuation Fund, preferring to keep a lid on its rising debt.

The Crown reported a bigger operating surplus than predicted of $6.48 billion compared to the forecast $3.75 billion due to an increase in the discount rate being used at the end of May to value the long-term cost of future liabilities and gains in the government's investment portfolios.

The residual cash deficit was a smaller than expected $5.58 billion, with the government reaping $1.67 billion from the sale of 48.2 percent of power company MRP, ahead of the $1.5 billion figure built into the forecasts. MRP was the first of the government's planned sell-down of its power companies, with Meridian Energy slated for a listing later this year.

Net debt was 1.4 percent lower than forecast at $55.74 billion, or 26.4 percent of gross domestic product, as at May 31, due to the stronger cash position.

NOTE: please be advised to read full articles from Business Desk Website, you will have to pay a subscription fee on their website.

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

NZ dollar holds gains on improved dairy, bank capital outlook
MARKET CLOSE: NZ shares gain; banks rally on Reserve Bank capital decision
NZ dollar rises; bank capital rules less harsh than expected
RBNZ relaxes capital requirements, allows preference shares, extends phase-in
NZ dollar extends gain amid mixed US data, possible trade progress
MARKET CLOSE: NZ shares dip on eve of major regulatory decisions
NZ dollar sees off global headwinds, holds above 65 US cents
NZ dollar holds above 65 US cents; dairy auction prices mixed
Dairy index falls on weaker butter, milk fat demand
MARKET CLOSE: NZ shares join global decline; US tariff move weighs on exporters

IRG See IRG research reports