DMO sets $3.2 billion government bond programme

The Debt Management Office (DMO), as part of the budget, today set a $3.2 billion Government bond tender programme.

That is about $200 million larger than market expectations but around $150 million more than had been projected in the December economic and fiscal forecasts. The programme is the same size as the 2002/3 programme.

It will consist of 11 tenders -- probably 10 of $300 million and one of $200 million.

The DMO said it would continue to issue February 2006 and April 2015 bonds.

It said additional funding available from 2002/3 as a result of a higher than expected budget surplus is expected to be partially offset by increases in other flows such as operating and investing activity, currency swaps to finance foreign currency reserves and possible diversification of the Earthquake Commission's investments.

Despite the Government's large budget surpluses of recent years, capital spending on such things as roads and hospitals and investment, particularly in Finance Minister Michael Cullen's new superannuation scheme, means the Government has to continue borrowing. Dr Cullen's superannuation fund, designed to smooth out future liabilities on the universal pension scheme, will require a contribution of $1.88 billion during the 2003/04 year, swelling the fund by June 30, 2004 to an estimated $3.95 billion.

The first bond tender will be on July 10.

- NZPA