February 13, 2026

#economy: Government Books Reveal Mixed Picture in Interim Financial Statements

Matthew Tukaki Posted On February 13, 2026

New financial data released by The Treasury shows how the Government’s finances performed in the six months to 31 December 2025, offering an early look at revenue, spending and the broader fiscal position ahead of the full-year figures.

In the government’s interim financial statements for the six-month period, core fiscal indicators were more favourable than previously forecast, suggesting tighter cost control and stronger revenue collection than expected in the Government’s Half-Year Economic and Fiscal Update. Analysts point out that this interim position provides a somewhat stronger foundation as ministers and officials prepare Budget 2026.

Despite this, the wider fiscal picture remains challenging for New Zealand. Treasury and independent forecasters have signalled that the Operating Balance Before Gains and Losses (OBEGAL) and its cyclically adjusted measure (OBEGALx) are expected to remain in deficit for the current financial cycle. These measures capture the difference between government revenue and spending, excluding volatile gains or losses, and are key to understanding underlying fiscal health.

While the interim performance beat forecasts, experts and Treasury forecasts continue to show a persistent deficit in the Government’s core accounts. This aligns with the picture painted in the Government’s Half-Year Economic and Fiscal Update released in December, which projected OBEGALx deficits through the near term, with a return to surplus not expected until the end of the decade.

The forecasts signal that fiscal discipline will remain necessary, with spending pressure from health, welfare and infrastructure investment continuing to shape the Government’s priorities. Rising costs associated with demographic pressures such as an ageing population and inflationary impacts on public services contribute to ongoing budget imbalance challenges.

Net core Crown debt as a share of gross domestic product (GDP) is projected to rise before stabilising later in the forecast period. Managing this debt trajectory is expected to be an important focus for economic policymakers, particularly given competing demands for investment in areas like climate, housing and social support services.

The interim financial statements come against a backdrop where economists describe the broader economy as subdued into 2026, with wage growth and employment patterns softening and inflation pressures still influencing household budgets and business conditions.

For Radio Waatea listeners, the interim statements provide an important snapshot of how government finances are tracking, but they don’t signal a dramatic turnaround. The books to 31 December 2025 show better-than-forecast performance, yet a structural deficit still shapes fiscal strategy as New Zealand moves into 2026 budgeting and economic planning. The Government will use this information to guide spending priorities, revenue policy, and investment decisions – balancing the need to support public services with efforts to manage deficits and debt responsibly.

As the year progresses, families, businesses and communities will be watching how these financial frameworks translate into policy and real-world impacts on services that matter most.