We are adopting a new net debt indicator…
In this Budget Update, we are adopting a new net debt measure to bring New Zealand closer in line with international reporting of net debt and improve comparability of New Zealand's fiscal position with other countries. The new indicator includes Crown entity borrowings, core Crown advances, and all assets and liabilities of the NZSF - refer to the box on page 69.
…and with the new net debt indicator that includes the NZSF, we are adopting a net debt ceiling of 30 percent of GDP
With the new net debt measure that includes the assets and liabilities of NZSF, we are adopting a debt ceiling of 30 percent of GDP (Figure 12). This is comparable to a ceiling of 50 percent of GDP based on the old net debt measure - see the box on page 71.
Figure 12 - Net debt indicators and corresponding debt ceiling
Source: The Treasury
To ensure transparency, the Treasury will publish both old and new net debt indicators
In the interim, the Treasury will continue to publish the old net debt indicator (net core Crown debt, which excludes the NZSF) to ensure transparency and comparability. In addition, it will publish the new net debt measure both including the NZSF and excluding the NZSF. This will clearly communicate the impact of including NZSF in the new net debt indicator. Refer to the box on changes to the Government's key fiscal indicators in the fiscal outlook chapter of the Budget Update document.
Debt remains at prudent levels throughout the forecast and projection periods
The fiscal outlook is expected to improve over the forecast period. The Treasury's Budget Update shows that debt using the new net debt measure is expected to peak in 2023/24 at 19.9 percent of GDP, while debt using the old net debt measure (net core Crown debt) is expected to peak at 41.2 percent of GDP in 2023/24 (Figure 13). New Zealand's strong economic recovery from the pandemic means that net core Crown debt (old measure) is expected to peak at around 6.8 percentage points lower than the Treasury predicted at Budget 2021.
Table 2 - Net debt measures
| Year ending 30 June (percent of GDP) | 2022 | 2023 | 2024 | 2025 | 2026 |
|---|---|---|---|---|---|
| Net core Crown debt (old measure) | 36.9 | 40.8 | 41.2 | 37.5 | 31.9 |
| Net debt (new measure) | 16.9 | 18.7 | 19.9 | 17.3 | 15.0 |
The long-term projections of net debt (both the new and the old net debt measures) in the Budget Update show a declining trajectory, well below the ceiling of 30 percent of GDP (for the new net debt indicator). This assumes a $7.0 billion capital allowance and $3.0 billion operating allowance in Budget 2026, growing at 2.0 percent per year in subsequent Budgets.
Figure 13 - Net debt (new and old measure) through to 2035/36
Source: The Treasury