Short-term intentions and long-term objectives
Table 1 - The Government's short-term fiscal intentions for the next four financial years
| Budget Policy Statement 2024 | |
|---|---|
| Debt | Maintain total debt at prudent levels. Put net core Crown debt as a percentage of GDP on a downward trajectory towards 40 per cent. |
| Operating balance | Work towards a surplus via a steadily improving trajectory for the operating balance (before gains and losses). Ensure consistency with the short-term intention for debt. |
| Expenses | Reduce core Crown expenses as a percentage of GDP. Ensure expenses are consistent with the operating balance intention. |
| Revenue | Ensure revenue is consistent with the operating balance intention. |
| Net worth | Maintain net worth at around 40 per cent of GDP. |
Note that in the Fiscal Strategy Report in May, the Government will bolster these short-term intentions with forecasts for the major fiscal variables.
Table 2 - The Government's long-term fiscal objectives for the next 15 financial years
| Budget Policy Statement 2024 | |
|---|---|
| Debt | Maintain total debt at prudent levels. Once net core Crown debt is below 40 per cent of GDP, maintain it within a range of 20 per cent to 40 per cent of GDP, subject to economic shocks. |
| Operating balance | Maintain operating surpluses sufficient to ensure consistency with the debt objective. This will ensure that, on average, over a reasonable period of time, operating expenses are funded from operating revenues and not from debt. |
| Expenses | Control growth in government spending so that, over time, core Crown expenses reduce towards 30 per cent of GDP. |
| Revenue | Ensure the level of operating revenues is consistent with the operating balance objective and supports long-term productive economic growth. |
| Net worth | Ensure net worth remains at a level sufficient to act as a buffer to economic shocks. |
These intentions and objectives are consistent with the principles of responsible fiscal management as set out in the Public Finance Act, as net core Crown debt between 20 per cent and 40 per cent of GDP is within the range of prudent debt as discussed above. The short-term intentions are consistent with the long-term objectives as they indicate the same direction of travel for each of the fiscal variables. Budget 2024 accords with the new short-term intentions as restricting operating allowances is aimed at bringing the OBEGAL back into surplus, reducing core Crown expenditure as a percentage of GDP and putting net core Crown debt on a downward trajectory.