Friday 19th February 2010 |
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New Zealand’s Treasury is less downbeat about the outlook for financial institutions signed up to the government’s retail deposit guarantee, cutting more than $100 million from its provisions for finance companies to draw down on the scheme.
The department that holds the government’s purse strings cut its provisions for the net cost of defaults under the deposit guarantee to $776 million in the six months ended December 31, from $899 million in the five months through November. The Treasury is picking the full-year provision to be $470 million.
This came in a month when Sandy Maier was brought in as a change manager to head up embattled lender South Canterbury Finance after it was removed from creditwatch negative by ratings agency Standard & Poor’s.
December also saw PGG Wrightson Finance and Marac Finance, the finance units of listed companies PGG Wrightson and Pyne Gould Corp. respectively, announce they would issue deposits not covered by the government guarantee.
The change in provisions came in the government’s financial statement for the six months through December, which showed the operating deficit was $1.45 billion smaller than forecast at $1.04 billion.
Tax revenue was $261 million ahead of expectations at $23.83 billion, due mainly to the big four Australian banks’ settlement with the Inland Revenue Department over their structured finance transactions.
Total expenses were $719 million below forecast at $39.63 billion. The operating balance before gains and losses was a deficit of $3.68 billion, smaller than the $4.51 billion deficit forecast.
The New Zealand Superannuation Fund and ACC investment portfolios continued to provide a return to the government’s coffers, with gains of $492 million and $212 million respectively. Their total assets are valued at $15.33 billion and $14.29 billion.
Net debt of $26.06 billion, or 14.1% of GDP, was ahead of the $25.12 billion forecast.
Businesswire.co.nz
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