… and the Government books are on a track back to surplus
It is important that we continue to support the recovery, particularly as the global COVID-19 situation remains volatile. Budget 2021 focuses on securing our recovery through continued targeted investments to position New Zealand for the future.
Figure 15 - OBEGAL through to 2024/25
Source: The Treasury
The Treasury's Budget Update forecasts the operating balance before gains and losses (OBEGAL) deficit will improve from 7.3 percent of GDP in 2019/20 due to the COVID-19 response, to a deficit of 0.6 percent of GDP within four years. The OBEGAL position has generally improved across the forecast period compared to previous forecasts in the Half Year Update. This continues the trend of fiscal indicators coming out ahead of forecasts due to New Zealand's strong economic recovery and the Government's careful management of expenses.
The projections on page 50 show a return to OBEGAL surplus in 2026/27. This compares to the consistent deficits across the 10-year projection period at the Pre-Election Economic and Fiscal Update 2020 (Pre-Election Update). The improved fiscal position reflects New Zealand's strong recovery. Other fiscal measures also show improvement in the Government's books. The total Crown operating balance and core Crown residual cash are both forecast to be in surplus in 2024/25.