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NZ in financial trouble – but by how much?

Nov 4th, 2008 | By | Category: Latest News, News

Figures released by the Treasury show New Zealand is $1700 million worse off than it was three months ago.

Crown financial statements for the three-month period ending September 30 were expected to show an $800 million surplus, but instead reveal a $900 million deficit.

This $1700 million blowout would have been enough to build five Te papa museums or 68,000 council flats.

Government losses on investments in financial institutions have been hit by the turmoil in the markets, resulting in a loss of $1800 million.

Another loss of $400 million was caused by a drop in the discount rate used for valuing ACC’s outstanding claims liability.

These losses were partly offset by higher-than-expected tax revenue of $500 million.

The New Zealand Superannuation Fund – which has been investing in stock markets overseas – took a hit of $1500 million when the markets crashed.

The gross national debt is $1000 million higher than forecast and has now reached $31.9 billion.

Finance Minister Michael Cullen responded to the release of the figures by reassuring the public those losses in entities like ACC and the New Zealand Super Fund did not affect the Government’s cash position.

Dr Cullen says the balance sheets vindicate the government’s decision not to blow the surplus in good times.

“As a result, New Zealand is today in a better position to weather the current global economic situation than the great majority of developed countries.”

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is a Whitireia Journalism student.
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