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New Zealand's operating surplus higher than expected for this fiscal year

[WELLINGTON] New Zealand's government reported a slightly better-than-expected operating surplus for the latest fiscal year due to higher tax revenues and as it pushed out some spending until after the election.

The surplus for the 12-months to June 30 was NZ$4.069 billion(S$3.96 billion), slightly higher than a forecast of NZ$3.706 billion in its pre-election forecast updates in August. That was up from NZ$1.831 billion in the previous fiscal year ended in June 2016.

New Zealand's economy raced along fueled by a surge in migration in the year to June, which had given the government a windfall from taxes on corporate profits and consumer spending on goods and services.

That resulted in tax revenues rising 7.4 per cent.

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The burst in tax intake was largely in line with expectations and the reduced spending that had led to the better-than-forecast surplus would likely take place the following year.

The numbers "don't indicate a substantial departure from what we said in our pre-election update back in August," Gabriel Makhlouf, chief executive at the New Zealand Treasury told reporters in Wellington.

Net debt fell to NZ$59.5 billion this fiscal year from 61.9 billion in 2016, its first decline since 2008.

Net debt fell to 22.2 per cent of gross domestic product, down from 24.4 per cent in the previous fiscal year and slightly lower than the government's forecast in August of 22.5 per cent.

New Zealand's election on September 23 was inconclusive and parties are scheduled to begin preliminary talks on Thursday to try to form the next government.

Both major parties favour fiscal prudence, even though they differ on policies regarding trade and immigration.

"The New Zealand Government will continue to focus on economic growth and fiscal consolidation combined with further investments in public services and public infrastructure in the years ahead," acting Finance Minister Steven Joyce said in a statement accompanying the release.

REUTERS