Staff Reporter –
Parliamentarians approved a new five-year Agreement increased budget allocation for Reserve Bank of New Zealand (RBNZ) at their session on June 4, 2015.
RBNZ Governor Graeme Wheeler said that the Agreement between the Bank and Finance Ministry will see additional monies to meet its operational requirements.
He said that the increase in core operating expenditure over the five years is modest, averaging 1.3% per year.
The new Funding Agreement will be valid from July 1, 2015 to June 30, 2020.
Planned increase
The new Agreement will marginally rise the Bank’s core operating expenditure from $49 million in 2014-2015 to $49.6 million in 2015-2016 and then increase to $52.1 million by 2019-2020.
It also provides for separate funding for direct costs of issuing banknotes and coins, amounting to $14.4 million in 2015-2016 and $20.2 million in 2016-2017 before reducing to $11.1 million in 2019-2020.
Mr Wheeler said that the Funding Agreement ensures that the Bank has sufficient resources to meet its expanded role and obligations while maintaining tight control of costs.
Important Instrument
According to him, the Agreement is an important instrument for maintaining the Bank’s operational independence.
“It provides multi-year funding and specifies how much of the Bank’s income may be used to fund the Bank’s operating expenses. The Bank has a number of important projects underway, including those related to issuance of new banknotes, development of the Bank’s treasury systems, and an upgrade of its payment and settlement systems,” Mr Wheeler said.
He said that the Agreement was made in an environment of fiscal constraint.
Productivity improvements, which include some reductions in staffing levels that began in February 2015, will restrain the growth in costs, he added.
“The Reserve Bank’s responsibilities have expanded considerably since 2008, including prudential supervision of insurers and anti-money laundering supervision, and it has developed its macro-prudential policy capabilities and toolkit,” Mr Wheeler said.
