Government predicts $765 million surplus for year

By BRIAN FALLOW

The Government expects to post a surplus of $765 million this fiscal year, despite significantly weaker than anticipated economic growth.

At the time of the June budget the Government predicted the economy would expand 3.7 per cent this year and yield a surplus of just over $1 billion.

However, in today's December Economic and Fiscal Update - the half-time score of the budget year - the Treasury has trimmed its economic growth forecast to 2.2 per cent.

That is a bit more conservative than most forecasters, whose average pick is 2.6 per cent.

A strong export sector is expected to boost growth to 3.7 per cent in 2001/02.

Finance Minister Michael Cullen said the Government would increase its borrowing programme by $800 million in the first half of 2001, largely to fund capital spending on hospitals which have been borrowing on their own behalf.