Weak consumption risks derailing New Zealand government surplus target

The New Zealand government's maintaining of its target of an operating surplus this financial year was still possible after Treasury figures on Friday showed a deficit of 990 million NZ dollars (745.65 million U.S. dollars) in the second half of last year.

The Treasury's financial statements showed the operating deficit was 381 million NZ dollars (287.05 million dollars) better than forecast in December last year, due mainly to higher than expected revenues from corporate and sales taxes.

A statement from the Treasury also warned that indicators for domestic consumption in the December quarter looked to be weaker than forecast, "suggesting this positive variance may not persist. "

Net debt at 66.5 billion NZ dollars (50.1 billion dollars), or 28.1 percent of GDP, was 672 million NZ dollars (506.14 million dollars) higher than forecast.

Finance Minister Bill English said the government still considered that the strong economy and "responsible fiscal management" could deliver a surplus for the 2014-2015 financial year when the final accounts were published in October.

But he conceded in a statement that "it remains to be seen whether the higher-than-expected growth in revenue continues through the rest of the financial year."

While government spending was coming in under forecast, "the challenge is coming from revenue, which the government has much less control over," English said.

The main opposition Labour Party said the accounts indicated the government was heading for a deficit of at least 300 million NZ dollars (225.9 million dollars).

The government had set the surplus target in 2011 as a test of their economic competence and they were on track to fail it, Labour finance spokesperson Grant Robertson said in a statement. Endi