Caution as New Zealand government deficit below forecast

Higher revenues and lower expenses than expected resulted in the New Zealand government's operating deficit coming in below forecast, the New Zealand Treasury said Thursday.

The government's accounts to the end of November 2016, the first five months of the financial year, showed a deficit of 768 million NZ dollars (560.25 million U.S. dollars), which compared with a Treasury forecast last month of 1.704 billion NZ dollars (1.24 billion U.S. dollars).

"Stronger economic growth is flowing through to the government's tax take," Finance Minister Steven Joyce said in a statement.

Tax revenue for the five months to November was 460 million NZ dollars (335.57 million U.S. dollars) ahead of forecast.

It was "appropriate to remain very cautious" in terms of what the increased tax receipts might mean for the full-year financial result, said Joyce.

The Treasury had forecast a surplus of 473 million NZ dollars (345.05 million U.S. dollars) for the whole 2016-2017 year.

"It is far too early to say whether that surplus will be able to be achieved," said Joyce.

The accounts included the first tranche of the government's expenses related to the 7.8 magnitude Kaikoura earthquake, which shook the upper South Island in November last year.

"It will still be some time before the full cost of the recovery is known," said Joyce.

"More generally these accounts underline the importance of strong fiscal discipline as we continue to build up our financial resilience in a relatively uncertain world." Endit