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The cost of Covid-19 is showing on the government books with a net Crown debt exceeding $ 100 billion for the first time.
While the number seems large, the Crown’s debt remains relatively low as a percentage of GDP, the most important measure.
The government ended 2020 on a relatively high note, posting a deficit of $ 4 billion in the six months to the end of December.
The deficit was $ 1.1 billion better than forecast in November 2020, when the Treasury was putting together its most up-to-date forecasts, called HYEFU (Mid-Year Economic and Fiscal Update).
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ROBERT KITCHEN / Things
PM Jacinda Ardern and Deputy PM Grant Robertson speak in Parliament.
The government books, published today, add to the series of economic data that emerged since the close of Covid-19 last year and that show both the government books and the economy in general in much better condition than was feared. initially.
The contraction in the deficit is largely due to higher-than-expected tax revenues thanks to higher spending by people.
In the six months to December 2020, the Government posted $ 45.3 billion in tax revenue, $ 800 million better than expected.
The Treasury said this was due in large part to GST being 5.5% better than expected as the kiwis hit stores.
Jan Mika / 123RF
The Crown’s net core debt has reached $ 100 billion.
Expenditures were also lower than expected, with the government spending $ 52.3 billion, or $ 400 million less than expected. The Treasury said this was mainly due to lower-than-expected welfare spending.
The Crown’s net core debt reached $ 104.4 billion, or 32.6% of GDP, still relatively low by international standards, but $ 40 billion more than at the start of the pandemic.
Finance Minister Grant Robertson said the books showed the government’s strong recovery from Covid-19.
“The government’s support for New Zealand businesses and workers during the Covid-19 pandemic has helped the economy recover quickly,” said Robertson.
“While the economy is in better shape than predicted, we are still well aware that there is a global pandemic.
“We will continue our balanced approach to managing the economy, giving space to provide support to protect New Zealanders from Covid-19 and its impact, while also providing support to those who need it most,” he said.
