Government accounts slump to $3.5b deficit

Friday 5th December 2008

Then New Zealand government's operating balance slumped to a $3.5 billion deficit, $5 billion worse than forecast, reflecting losses on investment in state funds such as the NZ Superannuation Fund.

The deficit in the four months ended Oct. 31 was the result of unrealized losses on investments as a result of "continuing turmoil in global financial markets," Treasury deputy secretary Peter Bushnell said in a statement.

Stock markets worldwide have slumped in the past three months amid increasing evidence of a prolonged global recession. The super fund had a larger-than-expected $3.5 billion loss on its investment portfolio. ACC's loss was $600 million and EQC's was $200 million.

The Government Superannuation Fund and ACC also had losses of $1 billion and $400 million respectively after their long-term liabilities were revalued.

The government's cash deficit was $900 million lower than expected at $3.7 billion, reflecting in transferring the $700 million from the previous government's Fast Forward fund and higher-than-expected petroleum mining royalties.

Gross crown debt was $3.1 billion higher than expected at NZ$33.6 billion. Net core crown debt was $1.9 billion lower than expected at $2.2 billion.

By Jonathan Underhill

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