Currency changes had impact on deficit

Press, 20 September 1985, Page 5

Currency changes had impact on deficit

PA Wellington The effects of currency realignments on overseas investments made up a high proportion of the deficit increase for the five months to August 31 compared with the corresponding period the previous vear, said the Secretary to ’the Treasury, Mr B. V. Galvin, yesterday. The figures to date were not necessarily a good guide to the end of year outcome, he said. The Government ran a deficit of $1992 million before borrowing in the first five months of the financial year, according to Treasury

figures released yesterday. Net expenditure was $6576 million and revenue was $4584 million. Mr Galvin said the reported deficit was high relative to the previous year of $1633.3 million and the 1985 Budget night forecast of $1286 million. He said that in accordance with Government accounting conventions, public account investments held overseas were regularly revalued in line with currency movements. The devaluation of 20 per cent in July, 1984, resulted in currency gains on investments of about $2OO million,

inflating the five-months figure. This year the appreciation of the currency during July-August had resulted in a decline in the value of those investments of about $l3O million. s The cumulative impact of the two currency realignments on the first five months of those years was of the order of $330 million. Mr Galvin said another factor was the timing of debt-servicing payments during the year. This year a much higher proportion of outstanding debt had interest payable within the first five months.