New Zealand's government reported a bumper surplus for the last fiscal year thanks to higher-than-expected tax revenue, but plenty of global risks meant policy makers will need to focus on reducing debt, the nation's finance minister said on Thursday. The surplus for the 12-months to June 30 was NZ$1.83 billion ($1.31 billion), much higher than the government's forecast in May for a surplus of NZ$668 million.
It marked the second consecutive year of surpluses, boosted by a NZ$3.8 billion rise in core tax revenue on solid economic growth. Final figures are calculated on the basis of the government's operating balance excluding gains and losses (Obegal), which strips out unrealised investment gains or losses. Finance Minister Bill English said the outlook for the economy is positive and the government's books are in good shape. However, "there are a lot of risks globally" and therefore reducing debt levels remains key, he said.
"We can only sustain positive results by continuing to focus on sound fiscal management," English said. New Zealand has posted deficits as large as NZ$18.4 billion in 2011 in the wake of the global financial crisis and a devastating earthquake that destroyed much of the city of Christchurch. In the latest fiscal year, government core crown expenses were also slightly lower than forecast at NZ$73.9 billion versus a forecast of NZ$74.4 billion.
The government's debt equalled 24.6 percent of gross domestic product versus a forecast of 24.9. English reiterated that the government remains committed to reducing net debt to around 20 percent of GDP in 2020. He said provided it had a strong fiscal position the government may be able to reduce debt faster and "if economic and fiscal conditions allow, we will begin to reduce income taxes."