N.Z. Budget Cash Deficit Wider Than Forecast on Early Payments
New Zealand’s budget cash deficit was wider than the government forecast after departments made payments for services earlier than they expected.
The cash deficit was NZ$8.85 billion ($6.2 billion) in the six months ended Dec. 31, or NZ$934 million wider than forecast in December’s fiscal update, the Treasury Department said in a statement released in Wellington today.
New Zealand’s budget showed a cash deficit for the first time in nine years in the 12 months ended June 30, and Finance Minister Bill English has projected six years of deficits as debt increases. Tax receipts fell and government welfare spending increased last year as New Zealand faced its worst recession in three decades.
Payments of NZ$1.3 billion occurred in late December which had been forecast in January, the Treasury said. The variance from forecast is expected to reverse in January, it said.
Tax receipts broadly matched forecast in the six months to December, the Treasury said. Company tax exceeded estimates after inclusion of the government’s settlement with banks over tax on structured finance transactions.
Excluding these transactions, company tax receipts were lower than forecast as firms lowered their tax assessments, suggesting “current-year profitability was weaker than expected in the December forecast and it is possible this will persist until the end of the year,” the department said.
The government’s budget operating deficit was NZ$1.04 billion, which was NZ$1.45 billion narrower than forecast.