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Government deficit less due to more recoveries from bank tax cases and lower provisions for deposit guarantee scheme

Government deficit less due to more recoveries from bank tax cases and lower provisions for deposit guarantee scheme

The New Zealand Government's accounts for the six months, ending 31 December 2009 had an operating balance (before gains and losses deficit) of $0.8 billion smaller than expected. When combined with higher than estimated investment gains, the operating deficit was $1.5 billion smaller than forecast. The December result was better than forecast because of a $0.3 billion increase in revenue in relation to the settlement of structured finance transactions announced in late December. It was also better than forecast because expenses were lower due to the timing of Treaty of Waitangi settlements being later than forecast ($0.2 billion) and a reduction in the provision for the deposit guarantee scheme ($0.1 billion). Treasury saidthat gross debt was $3.5 billion lower than forecast because of market conditions. The Reserve Bank's unsettled trade liabilities and NZDMO's collateral liabilities were also lower than forecast, this is partially offset by a higher demand for circulating currency over the holiday period, Treasury said today. These half year results also show that withholding taxes collected on interest earned by taxpayers is declining to levels last see about five years ago, as lower interest rates kick in, and people's savings have stopped growing. The RBNZ policy of low rates to restart the economy have taken more than half a billion dollars in taxes out of the government's accounts in the six months to December.

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