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Accounts 'largely in line' with forecasts

Radio New Zealand logo Radio New Zealand 6/11/2017
Finance Minister Grant Robertson re-signing the current Policy Targets Agreement with Reserve Bank Acting Governor Grant Spencer. © RNZ / Jane Patterson Finance Minister Grant Robertson re-signing the current Policy Targets Agreement with Reserve Bank Acting Governor Grant Spencer.

The new Labour-led Government's accounts are "largely in line" with Treasury budget forecasts, Finance Minister Grant Robertson says.

Mr Robertson said the accounts of the first three months of the fiscal year were largely aligned with budget forecasts. Core Crown tax revenue, expenses and the operating balance were close to forecasts in the May budget and economic fiscal update.

Core Crown debt was slightly lower than expected.

"These numbers are a look at the Government's books in the three months to 30 September. While Treasury notes they are close to the forecast, they do say that it is too early in the financial year to extrapolate the results to form a conclusion on the full-year numbers.

"The Government is committed to the fiscal parameters we outlined before the election, which include reducing government net debt to 20 per cent of GDP within five years of taking office, maintaining government expenditure to within the recent historical range of spending to GDP, and delivering a stable [operating] surplus.

"I do note that readings of business confidence during the government formation process reflected the temporary uncertainty at the time, which had been expected by economists no matter what the outcome of the coalition negotiations.

"So, while some commentators are noting this could mean slightly softer growth over this period, we are confident that our plans to boost productivity, kick-start sustainable growth and grow incomes will feed back into increased confidence and activity in the months ahead."

The Government also renewed targets for a review, which was requested by the previous finance minister Steven Joyce, of the Reserve Bank of New Zealand, which sets interest rates among other fiscal levers.

Targets include keeping consumer price inflation - used as a measure of household costs - between one and three percent on average.

Uncertainty around Labour's plans for the RBNZ helped to depress the New Zealand dollar - the world's 11th most traded currency - which has fallen more than 5 percent since September's election.

The Labour government has vowed to include full employment in its mandate alongside inflation.

That would bring the RBNZ in line with similar arrangements found in the United States and Australia, but would be one of the largest changes in the history of the pioneering central bank, which was the first to adopt a formal inflation target in 1989.

- Reuters / RNZ

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