The results reflect higher tax revenue and increased returns from government-owned assets. These providing a more positive outlook for businesses, investors and financial markets.
For the 11 months to the end of May, the government’s deficit, excluding ACC finances, stood at $6.8 billion. Including ACC finances, the deficit totaled $9.5 billion, outperforming expectations by around $3.4 billion.
The improved fiscal position has been driven by stronger government revenue across key areas. For example, core tax collections reached almost $115 billion. Higher company tax receipts and provisional tax payments suggest businesses have performed better than expected, reflecting improving conditions despite global uncertainty.
Additional revenue also came from stronger earnings generated by state-owned enterprises and higher returns from the emissions trading scheme. These sources contributed an additional $1.7 billion above Budget expectations, further strengthening the government’s financial position.
At the same time, government expenditure remained below forecast at around $900 million lower than anticipated. This combination of stronger revenue growth and spending discipline has helped narrow the fiscal gap without relying on unexpected one-off measures. Finance Minister Nicola Willis said the latest figures indicate the economy is regaining momentum following disruption caused by conflict in the Middle East earlier in the year.
Net debt reached $186 billion, representing 41.3 per cent of GDP. Debt levels remain elevated by historical standards although the improved trajectory may strengthen confidence among investors monitoring New Zealand’s long-term fiscal sustainability.
The latest figures are evidence that economic activity is more resilient than anticipated. Higher company tax receipts often reflect stronger corporate profitability, while restrained government borrowing reduces pressure on interest rates. Businesses considering expansion or investment may view the improving fiscal outlook as a positive signal for the broader economy.
The final government accounts for the financial year ending in June will be released in October, with expectations that the deficit will be smaller than the nearly $12 billion originally forecast in the Budget. The government continues to target a return to surplus by the 2028–29 financial year.
The improved results also align with recent recommendations from the International Monetary Fund, which has encouraged New Zealand to continue reducing fiscal deficits and rebuilding financial reserves. For businesses and investors, the latest figures suggest the economy is moving onto a firmer financial footing, although maintaining fiscal discipline will remain essential in the years ahead.
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