Appendix A-Cont
15 Whilst paragraph 13 above indicates that the forecast level of surplus is sufficient to maintain fiscal reserves real terms, an important additional consideration is the relationship of these reserves to Government expenditur The past and forecast relationship in this respect is illustrated in Diagram 2.
%
do
Reserve Balances (After 1988-89 Budget Revenue Measures)
as a Percentage of Government Expenditure
Diagram
90
80
70
60
50
Forecast
75-76 76-77 77-78 78-79 79-80 80-81 81-82 82-83 83-84 84-85 85-86 8687 87-88 88-89 89-90 90-91 91-92 Year
16 It will be noted that the current level of reserves in relation to Government's overall expenditure has only been bettered in the early 1980's. The relationship is expected to decline following the taxation measures included in the 1988-89 budget, but will remain well above 50%.
T
17 The importance to these forecasts of the economic growth rate assumption has already been emphasized. The tests included in Diagram 3 indicate this sensitivity. It will be noted, however, that even under the lower GDP growth assumption tested, the position remains close to balance.
Tests of Sensitivity
(After 1988-89 Budget Revenue Measures)
Diagram 3
Surplus
$ Billion
8
7
6
5
4
3
2
1
0
-1
-2
87-88
88-89
89-90
―
10
——
Deficit
Annual GDP Growth in
Real Terms:
90-91
91-92
Year
51%
do do do
%
No comments yet.
Private notes are available after approval.