Government says finances in 'strong position' to withstand coronavirus impact

Source: 1News

The Government is welcoming a surplus of $400 million - slightly higher than the $100 million deficit forecast by Treasury for the six months ending December 31, 2019. 

It was "mainly due to higher than forecast tobacco duties" of $200 million, Treasury officials said in a statement. 

It comes after a deficit of $900 million (0.3 per cent of GDP) was forecast for 2019/20 during the Half Year Economic and Fiscal Update last December. 

Tax revenue was $43.1 billion, 0.6 per cent above forecast, and core Crown expenses was $45.6 billion - 0.1 per cent below forecast. 

The operating balance was a $5.4 billion surplus, which was boosted by "an increase in the discount rates used in the ACC’s outstanding claims liability resulting in valuation gains of $1.2 billion, higher than the forecast losses of $2.3 billion". 

Net core Crown debt was at $64.5 billion (21 per cent of GDP), which was $400 million lower than the forecast. 

Finance Minister Grant Robertson described the finances as being "in a strong position to withstand global headwinds", with movement likely "in the second half of the year by the impact of coronavirus".

"Agencies are currently assessing the potential economic impact of the coronavirus outbreak and while that work is not yet completed it is clear that there will be some impact on the New Zealand economy.

"The announcement of last month’s New Zealand Upgrade Programme brought forward a package of infrastructure projects which will provide further support for the economy."