New Zealand's government accounts were in good shape in the opening days of the Covid-19 response, with debt likely to have hit the lowest point in the current economic cycle.
On Tuesday, the Treasury released the government accounts for the eight months to February 29.
Although the figures did show some effect of Covid-19, with the value of investments in ACC and the NZ Super Fund dropping sharply, the core measures of spending and income were steady.
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Treasury said core Crown revenue was within $100 million of forecasts at $62.7 billion. Core Crown expenses were also in line with expectations at $60.3b, meaning the Crown ran an operating balance before gains and losses (OBEGAL) of $1.4b, slightly larger than expectations.
The figures do not include any of the new programmes of government spending announced in March.
Net debt fell below $60b and was 19.2 per cent of gross domestic product (GDP). Economists have warned that an aggressive spending programme to keep the economy intact during a Covid-19 lockdown could see the figures surge.
Including other gains and losses, which are not measured in the OBEGAL, the operating balance was a $3b deficit, $4.7b weaker than Treasury forecast back in December.
"ACC's outstanding claims liability valuation losses were $2.8 billion higher than forecast primarily due to a decrease in the discount rates," Treasury said in a statement.
"In addition, unfavourable changes in market prices resulted in net investment gains being lower than forecast by $2 billion."
Last week, Parliament approved up to $52b in emergency spending powers, as governments around the world attempt to cushion their economies against what could be a severe economic shock.
In an interview with the Herald on Friday, Finance Minister Grant Robertson warned the current programme of spending could have a major impact on New Zealand's debt levels.
"Quite clearly, in order to cushion the blow economically, we've had to undertake some very significant spending programmes," Robertson told the Herald. "And therefore that is going to have a major effect on our debt to GDP ratio.
"Those numbers are getting finalised as we head towards the Budget, and they're not far away, those forecasts, but quite clearly it will have a significant impact."
Already we have had wage subsidies, more wage subsidies, even more wage subsidies, government loans and vague promises of more support.
"I've said it before but I think it is worth reiterating, going in at 19.5 per cent means that we do have room to move here," Robertson said. "And if you look at countries all around the world, with trillion-dollar programmes, in this kind of area, we're feeling like that fiscal headroom we've got puts us in a good place.
"Right around the world, governments are facing the fact that debt to GDP ratios, unemployment rates, levels of spending are moving into territory that nobody in our lifetimes has seen.
"I do not underestimate the significance of what we are doing but it has to be done."
On Tuesday, Robertson said the Government's strategy was underpinned by the strength of the finances heading into the response.
"Obviously, these numbers will look a lot different when the next set of accounts come out. But they indicate the economy's strength and the Government's ability to soften the impact and support New Zealanders and businesses," said.
"Governments around the world are lifting debt to pay for increased health spending and support for their economies. Advanced economies are starting from an average net debt position above 70 per cent of GDP, with the UK around 75 per cent, the US above 80 per cent, Italy above 120 per cent and Ireland above 50 per cent of GDP."