New Zealand’s budget deficit was NZ$473 million ($388 million) wider than forecast in the seven months through January after higher-than-expected earthquake insurance liabilities, a report today showed.
The government’s operating deficit before gains and losses on investments was NZ$4.314 billion in the seven months ended Jan. 31, compared with the NZ$3.841 billion gap forecast in the pre-election fiscal update published in October, the Treasury Department said in a report released in Wellington.
Prime Minister John Key is forecasting the government will eliminate the shortfall by 2015 as it cuts spending and reduces debt by selling as much as 49 percent of four state-owned energy companies. Last month, the government said the 2015 surplus may be a third the size it predicted in October as weaker world growth curbs revenue.
“Returning to surplus won’t be easy,” Finance Minister Bill English said in a statement after the report was published. “But it is one of the most important things the government can do to ensure New Zealand can withstand future shocks and build a more competitive economy based on exports and new jobs.”
The state’s earthquake-related insurance costs were NZ$290 million higher than forecast for the seven months, according to the report. That was a result of continued earthquakes and aftershocks in the Canterbury region, with damage caused by a Dec. 23 temblor estimated at NZ$300 million.
Core crown tax revenue was NZ$946 million below forecast, partly due to weaker labor market conditions, English said.