National deficit/surplus Extraordinary receipts Extraordinary transfers Net borrowing requirement Budget 2007/2008 2008/09 18.30 1.80 -0.80 19.30 -8.90 7.20 -4.90 -6.60 Budget 10.73 1.25 0.40 11.58 Outcome Financing the National Budget – MTBPS October 2008
% Domestic debt Foreign debt Government debt as % of GDP
The most pressing priorities that Cabinet has approved 1.Improving the quality of education and skills development. 2.Improving the provision of healthcare. 3.Investing in the criminal justice sector to reduce the levels of crime and to enhance citizen safety. 4.Expanding investment in the built environment. 5.Decreasing rural poverty.
Inflation target unchanged 1.Mortgage interest rates as a measure of housing costs in headline CPI will be replaced with a measure of owners equivalent rent in 2009. 2.Replacement of mortgage interest rates with owners equivalent rent is in line with international best practice. 3.Headline CPI (CPI for all urban areas) will replace CPIX inflation for metropolitan and other urban areas as the official targeted measure of inflation when the changes are implemented in February next year. 4.The Minister of Finance and the Governor of the Reserve Bank have agreed that the target band for headline CPI will remain unchanged at 3-6 per cent. 5.It is expected that the reweighted and rebased CPI will indicate a somewhat lower rate of inflation in 2008 than the present index, partly due to lower expenditure weights for food and petrol.