Government deficit $543m less than forecast

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The government’s finances are in much better shape than expected as strong domestic spending and company earnings underpin the tax take.

Treasury chief executive Dr Caralee McLiesh.

Treasury chief executive Dr Caralee McLiesh.
Photo: RNZ / Dom Thomas

Official figures show a deficit of $4.3 billion for the five months ended November, $546 million less than forecast in the December fiscal update.

The lift in consumer spending continued, but at a slower rate, with GST revenue $400m above forecast.

Income and corporate tax revenue were also $300m higher than expected.

“This indicates that the 2020 income tax year was not as adversely affected by the Covid-19 pandemic as was expected, which the Treasury said showed companies had not been as hard hit by Covid-19 as expected,” Treasury said.

The net debt level grew to $98.9b, 30.9 percent of the value of the economy compared to a forecast 31.1 percent.

The December update forecast a budget deficit of $21.6b for the year ended June.

“The country is in a stronger fiscal position compared with other developed nations, and we will carefully prioritise our spending to maintain the balance between short-term needs and long-term requirements,” Finance Minister Grant Robertson said.

“This year our focus is on continuing that momentum, while also tackling some of the long-term challenges facing New Zealand – housing, climate change and child poverty.”

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