New Zealand's Revised Budget Forecast Shows Smaller Deficit Ahead of Election

New Zealand's government has revised its budget forecast to show a smaller deficit and lower debt than initially projected, according to a pre-election update released on September 29.

The Treasury forecast an operating balance before gains and losses (OBEGAL) deficit of NZ$8.73 billion ($4.94 billion) in the fiscal year ending June 30, 2027, down from the May Budget forecast of NZ$14.09 billion.

Finance Minister Nicola Willis attributed the improved results to higher-than-expected tax revenue and lower government spending.

The economy is still recovering from prolonged weakness, but the Treasury update suggests inflation may return to its target band of 1% to 3% in the second quarter of 2027.