Readers may recall that a part of Wayne Swan’s doomed attempt to scrape up a surplus was depleting RBA reserves via taking dividends from the bank against the wishes of Captain Glenn. No longer, from the AFR:
Treasurer Joe Hockey will make a one-off $8.8 billion capital injection to the Reserve Bank of Australia to bolster a reserve fund used by the central bank to cover losses on its massive foreign exchange holdings.
…“This injection of funds puts beyond any doubt the Reserve Bank’s continued ability to perform its core monetary policy and foreign exchange functions, in an environment of heightened financial market volatility,” he said.
Captain Glenn will be pleased. The deficit will not be:
The cash grant will add to the deficit, which was forecast by Treasury during the election to be $30.1 billion.
Since being elected, the new government has signalled further worsening in revenue, suggesting the overall deficit may blow out to more than $40 billion, compared to $18.8 billion in 2012-13.
