Appendix A-Contd.
SECTION III-COMMENTARY ON THE FORECAST
The Fiscal Balance
13 Before the 1988–89 taxation measures are taken into account, the forecasts indicate an average consolidated cash flow surplus over the forecast period from 1988–89 to 1991–92 of around $5.9 billion. This drops to around $2.7 billion after the taxation measures proposed in the 1988-89 budget are taken into account. An average surplus of this order is sufficient to ensure that reserve balances are maintained in real terms and provide a cushion for unforeseen events. An impression of the relative size of the forecast surplus/deficit can be gained by comparing it to the level of Government expenditure. The historic and forecast relationship in this respect is illustrated in Diagram 1.
%
Consolidated Cash Surplus/(Deficit) (After 1988-89 Budget Revenue Measures)
as a Percentage of
Government Expenditure
Diagram 1
60
50
40
30
20
20
10
0
Forecast
-10
75-76 76-77 77-78 78-79 79-80 80-81 81-82 82-83 83-84 84-85 85-86 86-87 87-88 88-89 89-90 90-91 91-92 Year
14 The operating surplus after interest (recurrent revenue over expenditure) is sufficient to finance an average of some 90% of capital expenditure over the forecast period from 1988-89 to 1991-92 before budget revenue measures, but will fall to 69% with the implementation of these measures. This remains significantly above the minimum 50% target.
9