The operating balance before gains and losses was $398 million, compared to a half-year forecast deficit of $332 million. Increased core crown revenue was mostly responsible for these gains, coming in $606 million more than expected at $48.1 billion. This included core tax revenue at $44.68 billion, or $828 million more than expected. Increased revenue more than offset lower-than-forecast interest income and core crown expenses, which were $113 million more than expected at $48.4 billion.

Increased revenue translated into a residual cash position deficit of $1.5 billion, which was $1.6 billion better than forecast "primarily reflecting higher than expected tax receipts." GST accounted for $306 million or 2.6 percent higher than forecast, with GDP data for the December quarter showing stronger than expected nominal domestic consumption. Company tax was 4.3 percent above forecasts at $244 million, with source deductions including PAYE $184 million better than expected due to stronger labour income growth. While tax revenue is expected to stay strong, Treasury said part of the variance is expected to reverse in March.

The overall operating balance, including gains and losses, was a deficit of $5.1 billion, or $4.6 billion worse than expected. According to Treasury, this was mostly due to higher-than-expected actuarial losses on ACC claims liability and losses on financial instruments due to unfavourable market movements. "This was driven by the Super Fund recording a NZ$1.8 billion loss due to unfavourable market conditions, and falling interest rates and an increase in claim volumes have contributed to a NZ$3.1 billion increase in ACC's outstanding claims liability," said Finance Minister Bill English.

According to Mr English, "The monthly results can fluctuate significantly - the February OBEGAL surplus was $500 million less than in January - so we don't put too much stock into any particular month's results... What is more pleasing is the overall trend in the Government's books. We've moved from an NZ$18.4 billion deficit to around balance, and as long as we remain fiscally prudent we are on track to reduce net debt to around 20 per cent of GDP in 2020."

Mr English is scheduled to release the latest budget on May 26 - the eighth from the National Party since 2008 - with a full-year return to surplus originally forecast for 2017 due to slower than expected growth in the tax take. In his speech to open the 2016 parliament, Prime Minister John Key said lower economic growth forecasts would reduce anticipated tax revenues by $17 billion over five years. While an obegal-deficit of $400 million was forecast in December, better than expected results in recent months may mean a full-year return to surplus sooner than expected.


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