Crown dividend and interest income lower than expected

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Core Crown revenue in the eight months to the end of February stood at $36.6 billion, 1.7 per cent lower than forecast, partly due to lower than expected interest and dividend income, Treasury says.

Core Crown tax revenue was close to forecast overall, with source deductions above forecast while corporate and GST were below forecast.

Core Crown expenses in the eight month period stood at $44.3b, 0.6 per cent lower than forecast.

That was mainly due to underspends of $574 million across a number of departments offset by a $331 million revision in the estimate of recoveries relating to the deposit guarantee scheme which was not forecast, Treasury said today.

The Earthquake Commission's booking of the estimated net costs from the February 22 Christchurch earthquake had increased the operating balance deficit by $1.5b, but the operating balance was boosted by unforecast gains of $5.2b.

Of those, $3.2b came from equity investments in the NZS Fund and ACC and $2b were actuarial gains on ACC and GSF liabilities.

Net debt at $37.6b, or 19.3 percent of GDP, was $489m lower than forecast.

With the core Crown residual cash deficit 1.1 per cent lower than forecast at $10.8b, most of the variance related to issues of circulating currency which was $276m higher than forecast.

Gross debt stood at $63.4b, or 32.6 per cent of GDP, which was $14b higher than the same time last year.

As a result of the higher debt position, finance costs for the eight months ended February 28 were $1.9b, compared with $1.5b in the same period last year.

The earthquake was just six days before month-end, so the financial statements did not include the full costs of the earthquake, Treasury said.

They did include an estimate of the EQC's net cost of $1.5b which was the main reason for the operating balance before gains and losses deficit exceeding forecast by $1.7b, to be at $9.2b.

Additional earthquake-related costs would be included in coming months when they could be reliably quantified and as subsequent policy decisions regarding earthquake recovery were made.

The monthly statements are compared against monthly forecast tracks based on the 2010 Half Year Economic and Fiscal Update which was published in December.

- NZPA