According to Finance Minister Nicola Willis, the latest set of government accounts supports other evidence that the economy has strengthened.
The Financial Statements of the Government for the 11 months to May show core Crown revenue up NZD 1.7 billion on the forecasts in the Budget, and core Crown expenses NZD 900 million lower than forecast.
Willis said the biggest contributor to the improvement in Crown revenue was corporate tax, which was NZD 700 million higher than forecast. This has been positive because it indicated an overall increase in profitability for the business sector.
The headline operating balance indicator, OBEGALx, showed a deficit of NZD 6.8 billion over the 11 months, NZD three billion below the forecast at the Budget.
“These are a very encouraging set of accounts. New Zealand has been through a difficult few years, but Kiwis can take heart from the underlying strength of the economy,” said Willis.
“All the indications are that the conflict in the Middle East slowed growth in the second quarter of this year, but that the economy is already regaining the momentum it had developed before the conflict began.”
She added that oil prices have fallen to pre-conflict levels, inflation expectations have declined, business confidence has rebounded, tourist numbers are up, and exports continue to generate high returns.
The Crown accounts for the full year won’t be finalised until early October, and further variance is likely, but Willi said these were positive signs that the books will be in better shape than forecast at Budget.
“That means less debt and more proof that the steps the government has taken to fix the basics and build the future are working.”
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