Covid-19 coronavirus: Govt spending $4.4 billion higher than forecast as deficits loom

The Government has borrowed almost $22 billion more than it had previously forecast over the last nine months, as the Covid-19 pandemic continues to put pressure the New Zealand economy.

The amount of money the Government has spent, its total expenses, was $4.4 billion higher than expected over the same period, due in part to an increase in benefit payments, and support offered to businesses.

And the expected Government surplus expected over the past nine months has turned into a $2.7 billion deficit – some $4 billion lower than had been expected.

This is according to the Treasury's interim Financial Statements – a stocktake of the Government's books over the past nine months.

But the Treasury has warned that the worst of the Covid-19 pandemic is still to come.

"The March results only show a small proportion of the expected impacts of Covid-19 and the Government's response to Covid-19."

For example, the statement shows that the wage subsidy scheme had the largest impact on expenditure, costing $3.9 billion.

Finance Minister Grant Robertson yesterday revealed that the scheme has so far paid out $10.6 billion.

In a statement this morning, Robertson said the Treasury's numbers show how quickly the Government got money out the door to help New Zealanders as Covid-19 hit the country.

"I make no excuses for our swift and decisive actions to cushion the blow as Covid-19 reached our shore."

Treasury's data shows the Government's net core Crown debt is $66.4b, some $4.2b higher than had forecast - that works out to be 21.3 per cent of New Zealand's GDP.

But then it comes to the Government's total borrowing, as of March 31 that was at $144.7 billion - $21.6b higher than had been expected.

Treasury points out that $13.6b of that extra borrowing was due to "increased settlement deposits with the Reserve Bank".

The Treasury's numbers will be updated next week when the Government puts out the Budget.

Those figures will reveal a much more updated picture of the Government's books.

Yesterday, Robertson revealed the Government will be running deficits for an "extended period" of time and its debt levels will reach an all-time high.

He did not go into detail about how badly the economy would be hit by the pandemic, instead saying he would reveal more in next week's Budget.

He did say, however, say the numbers will be "sobering".

Treasury's interim financial statement released this morning shows that over the last nine months, the amount the tax the Government collected was $400 million higher than expected – for a total of $65.9 billion.

But the numbers also show a deficit of $2.7 billion – which was $4 billion lower than had been expected.

"We used our Government's strong balance sheet to move quickly with our public health response, reduce the impact on workers and businesses, and position the economy for recovery," Robertson said this morning.