Deficit down

The Herald reports:

The New Zealand government had a smaller operating deficit than expected in the first eight months of the financial year as it took in more income tax and tax from source deductions than it had forecast.

The operating balance before gains and losses (obegal) was a deficit of $3 billion in the eight months ended February 28, 16 per cent smaller than forecast in the December half-year economic and fiscal update.

Core Crown tax revenue was $37.6 billion in the first eight months of the year, which was $719 million, or 2 per cent higher than forecast. Source deductions were $266 million above forecast, which the Treasury said showed underlying strength in the economy.

That is an encouraging sign that we may get out of deficit by 2014/15. In 2008 the projected deficit was permanent and ever-growing. The outlook was a Europe type spiral into ever-increasing debt.