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Cash reserves reach $55m

Monday October 02, 2017 Written by Published in Local

Government’s net cash reserves stood at $55 million at the end of financial year 2016/17 which ended in June this year.

 

The figure is an increase of $26m from the amount recorded at the end of the 2015/16 financial year.

Finance minister Mark Brown said the government’s operating balance was in surplus of $45m at the end of the 2016/17 financial year.

This, he said, was more than government forecast in their budget, which was an anticipated surplus of about $14m.

Brown said the unexpected extra revenue had boosted government’s cash position.

“As a minister of Finance, this is a much better position to be in, with significant cash reserves, than being in a position with no cash reserves and not be able to meet the demands or the development agenda of the country,” Brown told a press conference yesterday.

“We really are in a good position as a country to be able to advance our priorities without putting too much stress on our debt position, and without imposing too much cost on people.”

Brown said the bumper increase in the government’s operating balance in 2016/17 was the result of more than expected revenue generated through general taxation.

“Of course this is a reflection on the increase numbers of visitors that we have had coming through in this financial year, and that resulted in increased economic activity through accommodation, through the entertainment and hospitality sector.

“This has seen an increase in VAT collections above what we expected, an increase in company tax which means our private sector is benefitting from the government policies that we have put in place to encourage this tourism growth.”

Another major factor boosting government revenue in 2016/17 was higher than expected revenues from the fisheries sector, Brown said.

There was also lower than expected expenditure from the operating side of the budget to the tune of a couple of million dollars.

“So really the surplus was generated through income rather than less than expected expenditure,” Brown said.

From a fiscal deficit position, which takes into account the capital expenditure and includes depreciation costs, Brown said the government expected a surplus of around $16 million.

However, he said it was now in a surplus position of just over $30m.

A proportion of this surplus was from capital expenditure that was not spent during the financial year and Brown said this would be carried forward into the next financial year.

“I would expect close to $20 million of that fiscal balance to be committed to the projects which will roll over this year, includingTe Mato Vai stage two, the submarine cable that we have committed to recently and the ongoing work with the Mei Te Vai Ki Te Vai sanitation project.”