Budget deficit widens more than expected as tax take falls

Friday 20th February 2009

New Zealand's budget deficit was bigger than the Treasury had forecast in the six months ended December 31 as the nation's prolonged recession eroded government revenue from taxes.

The cash deficit was $8.26 billion in the latest period, $856 million more than forecast, according to the Treasury. Tax revenue was about $1 billion below forecast.

The operating deficit of $6.2 billion, was $8.41 billion lower than forecast, reflecting investment losses that were $4.9 billion more than expected, ACC losses of $2.4 billion as a result of a change to the discount rate applied to its unfunded liability, and the drop in tax revenue, the department said.

By Jonathan Underhill

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