Business & Economy

Despite COVID-19, New Zealand’s deficit lower than forecast

Sydney, Australia, Nov 10 (EFE).- New Zealand’s strong domestic spending has reduced its expected fiscal deficit, the government reported Tuesday, despite tough measures, including two lockdowns, implemented to stop the spread of COVID-19.

According to third-quarter data from the Treasury published Tuesday, the operating balance before gains and losses (OBEGAL) of the Oceanian country is NZ$3.2 billion ($2.18 billion), while data released in mid-September indicated that the figure was expected to reach NZ$6.5 billion.

“When total gains and losses are added to the OBEGAL result, the operating balance (excluding minority interests) was a $6.8 billion deficit, and $1.3 billion less than the deficit forecast,” the Treasury said in a statement.

The accounts also show NZ$22 billion in core Crown tax revenue – NZ$2.1 billion above forecasts, due to higher domestic spending.

“Tax revenue was $2.1 billion above the PREFU 2020 forecast. $1.2 billion of that total came from GST showing consumers were spending, reflecting their confidence in the economy,” Finance Minister Grant Robertson said in a statement.

Net core Crown debt was at $94 billion, or 30.5 percent of gross domestic product, compared to 31.7 percent forecast in September.

“This compares to the average for advanced economies before COVID of about 80 percent. Debt servicing costs remain low and are forecast to stay that way,” Robertson said.

The government of Prime Minister Jacinda Ardern has been internationally applauded for its prompt and tough handling of the pandemic, confining the country in March with only 50 confirmed cases.

In August, after more than 100 days without local infections and during a new normal, the government again declared the lockdown of Auckland – which, with 1.7 million residents is the country’s most populous city – after finding four infections within the same family, leading to an outbreak.

“The Government’s decision that the best economic response to the COVID-19 pandemic was a strong health response has proved time and again to be the right one,” Robertson said.

“There was no playbook for this health crisis, and we acted swiftly as the situation unfolded to support our businesses and workers. Those decisions helped us keep kiwis in jobs and mean we are now in a strong position to drive the economic recovery,” he added.

New Zealand, which has kept international borders closed since March, has accumulated some 1,630 cases since the beginning of the pandemic, including 25 deaths and 51 active cases. EFE

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