3 Apr 2009

Government's cash deficit hits $6.6 billion

10:24 pm on 3 April 2009

The New Zealand Government's cash deficit for the first eight months of the financial year has blown out to $6.6 billion.

When losses from government investments are also taken into account, the operating deficit reached $8.4 billion.

The cash deficit is now nearly $2 billion worse than forecast in the pre-election update in October.

Lower tax returns, higher investment losses and bigger liabilities for the Accident Compensation Corporation and the Government Superannuation Fund are behind the rising deficit.

Gross debt has risen significantly, but the Government's financial assets have also gone up, with the result that net debt has not risen as quickly.

Finance Minister Bill English says the deteriorating state of the Crown accounts is not surprising, as debt is rising faster than the Government expected.

However, Mr English says it is important that though the economy is at the bottom of a recession the Government keeps pumping money into it.