English confident on Budget surplus

Finance Minister Bill English says the Government is on track for a Budget surplus in 2014-2015 despite the drought, but said it would affect the economy for a couple of years.

Treasury was looking carefully at the forecasts for the May 16 Budget, he said.

"I would expect though, that we will still be able to achieve surplus."

Its effect on the economy was yet to be known but its impact would last at least a couple of years. It would take some time for farmers who slaughtered stock to rebuild their herds and to work off tax losses.

He said that recent forecasts, showing better revenue, might have given him more choices over spending, but that would now be removed.

"It probably means that where we were expecting a bit more room to move because things were running a bit better than expected, that that is not now going to be the case. The drought will peg that back but we have yet to see how far."

He did not think it would be a dramatic difference but it would continue to be a tight Budget. Some of the banks had estimated that it would affect GDP from $500 million to $1 billion.

"If it is that big it would affect our tax take," Mr English said. The Budget in May last year forecast a $197m surplus in 2014-15 but by the half-yearly update in December that had been reviewed downward to $66m. In the Crown accounts for the seven months to January 31, expenses were $282m under forecast and revenue was $486m above estimates.