The New Zealand government will keep the reins on new spending for a considerable time as it battles to control deficits and rising debt, the Finance Minister said on Friday. Earlier data from the Treasury showed a lower than expected government deficit for the eight months to February 28 largely because the fall in expenses was larger than the fall in revenue.
Finance Minister Bill English said the figures reflected government efforts to stop the unsustainable growth in spending, with a cap of NZ$1.1 billion set on any new spending in the coming 2010/11 fiscal year. "This will continue for the foreseeable future, as we still face several years of large deficits," English said in a statement.
The operating balance excluding gains and loses (OBEGAL), which strips out unrealised investment gains or losses, for the eight months to February 28 was a deficit of NZ4.49 billion ($3.2 billion), or 11.2 percent better than the forecast in December's fiscal update for a deficit of NZ$5.05 billion.
The Treasury said the smaller deficit was largely because of reduced government expenses, which were 2.2 percent below forecast, while total revenue fell only 0.9 percent. Net government debt stood at NZ$24.17 billion, which was 0.3 percent less than forecast, equating to 13 percent of gross domestic product. The NZ government is expected to post large budget deficits and need hefty borrowing at least until 2016.