Government’s financial books stronger than expected

Government finances are in much better shape than expected, with strong domestic spending supporting tax levies.

Official figures show a deficit of $ 3.8 billion for the four months ended in October, less than half of the amount forecast before the election.

The surge in consumer spending after the lockdowns boosted GST revenues by more than $ 1.6 billion above forecast.

Income and corporate tax revenues were also higher than expected, which the Treasury said showed businesses had not been hit as hard by Covid-19 as expected.

Government spending was lower than forecast, with $ 1.4 billion less going to the wage subsidy program.

Finance Minister Grant Robertson said stronger-than-expected finances were a rationale for the government’s response to the pandemic.

“Overall, the government’s accounts are holding up well, which is the result of the government’s action to support New Zealand’s economy through a once-in-a-lifetime economic shock.”

The level of net debt reached 97 billion dollars, or 31.5% of the value of the economy against a forecast of 32.5%.

Better-than-expected finances suggest that the large budget deficits and debt levels forecast in the August pre-election update will be reduced in the biannual economic update in two weeks.


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