NZ Budget Deficit Shrinks as Tax Revenue Surges

New Zealand's government has forecast a smaller budget deficit and lower debt than initially projected in its May budget.

The Treasury reported that the operating balance before gains and losses (OBEGAL) deficit is expected to be NZ$8.73 billion (US$4.94 billion) by June 30, 2027, compared to a NZ$14.09 billion deficit forecasted in May.

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

The Treasury also stated that inflation is expected to return to the target band of 1% to 3% by the second quarter of 2027, which could be a positive sign for the economy ahead of the November general election.