4 Mar 2021

Government's deficit of $4.4b, $3b less than forecast

1:33 pm on 4 March 2021

A strong tax take and surprise repayments of the wage subsidy have bolstered the government's finances.

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The strength of the economic rebound has boosted the tax take by $1.9 billion more than forecast, latest figures show. Photo: 123RF

Official figures show a deficit of $4.4 billion for the seven months ended January, nearly $3b less than forecast.

The strength of the economic rebound has boosted the tax take by $1.9b more than forecast.

"These positive variances to forecast reflect an improvement in economic conditions, in particular, stronger domestic spending, higher profitability and better labour market conditions than forecast," the Treasury said.

A fall in tobacco consumption meant lower income from customs duties.

The government's expenses were about $500 million lower than forecast, in part because of a higher level of wage subsidies being repaid.

Net debt was also lower than expected at $100.4b, equating to 31.3 percent of the value of the economy.

However, strong financial markets and increases in the value of investments held by government agencies such as the Super Fund and ACC, meant the government's overall finances were in surplus of $3.3b against a forecast deficit of $11.1b.

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