The NFO presents medium-term projections of the finances of the Commonwealth and State general government sector (as defined by the ABS) on the basis of policy settings as at February 1997. The 1997 NFO provided updated estimates for 1996-97 and projections for the three years to 1999-2000.
The NFO projected a marked improvement in general government sector finances over the outlook period, with the total general government sector's underlying deficit projected to decline from 1.7 per cent of gross domestic product (GDP) in 1996-97 to an underlying surplus of 0.8 per cent of GDP by 1999-2000. This primarily reflects an improvement in the position of the Commonwealth general government sector which is driven by fiscal consolidation measures and the impact on Commonwealth outlays and revenue of anticipated economic growth. Net debt for the combined sector was projected to decline over the outlook period, again mainly as a result of developments in the Commonwealth general government sector.
The forecast improvement in the underlying deficit for the combined Commonwealth and State general government sector will close the sector's gap between saving and investment and hence eliminate its direct contribution to the current account deficit.
The measures announced in the 1997-98 Budget will further improve the fiscal position of the combined Commonwealth and State general government sector.