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Financial surplus target slipping beyond reach, admits New Zealand gov't

Xinhua, April 10, 2015 Adjust font size:

The New Zealand government admitted Friday that it might fail to meet its self-imposed target of an operating surplus in its accounts this financial year.

The Treasury's financial statements for the eight months to the end of February showed a deficit before gains and losses of 269 million NZ dollars (203.89 million U.S. dollars).

The accounts followed a slight surplus of 77 million NZ dollars (58.35 million U.S. dollars) in the seven months to the end of January in statements published in March.

Revenue from some tax sources had remained higher than forecast in February, but not as far ahead as in January, said Finance Minister Bill English.

The goods and services sales tax saw a significant shortfall in part due to very low inflation leading to lower-than-expected spending on consumption, English said in a statement.

Government spending in the eight-month period was lower than forecast, and taken over the year, core expenditure for the 2014- 2015 financial year was forecast to be 4.1 billion NZ dollars (3.1 billion U.S. dollars) lower than forecast when the government first set the surplus target in 2011.

"We're continuing to manage the books carefully but lower inflation, while good for consumers, is making it less likely that the final accounts in October will show a surplus for the whole year," English said.

Next month's budget would produce new forecasts that he expected would take into account further reductions in the inflation outlook and show how far the government deficit had come since it hit 18.4 billion NZ dollars (13.94 billion U.S. dollars) in the 2010-2011 financial year.

The main opposition Labour Party said the accounts showed something seriously wrong with the government's economic management.

"The reason the government has failed to reach surplus is they haven't been able to get the productive economy humming to generate revenue," Labour finance spokesperson Grant Robertson said in a statement.

The opposition Green Party said the government's tax cuts for the rich and bungled state-owned asset sales had left the accounts in a shambles.

"Bill English has staked his job and his reputation on being able to return the government books to surplus, but he keeps failing," Green Party associate finance spokesperson Julie Anne Genter said in a statement. Endi