Government's operating surplus beats forecast by $936m

The government's operating surplus for the six months ended December was up $936 million on forecasts, the Treasury said today.

Crown Financial Statements released today showed the operating surplus was $4.526 billion, ahead of the forecast $3.590 billion.

Treasury said a number of factors contributed to the higher than expected surplus: core Crown investment income beat forecasts by around $400 million ; surpluses from state-owned enterprises and Crown enterprises were higher than forecast by $368 million; and core Crown expenses were lower than forecast by $167 million, primarily in the health sector.

The operating balance, excluding revaluations and accounting policy changes (Oberac), was $500 million ahead of forecast at $4.09 billion.

Finance Minister Michael Cullen said the operating balance and Oberac contained non-cash components which did not bear directly on the bottom line. This included investment gains which would be held on to by state-owned enterprises and Crown entities, such as the New Zealand Superannuation fund, rather than "skimmed off by the Government".

Dr Cullen wanted to focus on the cash flow, which at $91 million for the six months, was $38 million ahead of forecasts.

"The cash flow is an important indicator as it shows the balance after all spending, capital and operational, has been accounted for and represents either the amount available to the government for the repayment of debt or the amount that has to be borrowed," he said in a statement.

Dr Cullen said the six month cash flow was broadly on track to achieve the full year forecast of $1.4 billion. He said $1.4 billion was needed to help fund the borrowing requirement of $2.2 billion over the next two years.

Meanwhile core Crown debt was $14.528 billion, against a forecast of $15.405 billion, while net crown debt was $14.5 billion, $877 million better than forecast.

- NZPA