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August 2023 Variation to the 2020-2025 Funding Agreement

This variation to the Funding Agreement was entered into on 22 August 2023.

This variation to the Funding Agreement is to provide additional funding required by the Bank to implement the new regulatory and supervisory regime under the recently enacted Deposit Takers Act 2023, and the Depositor Compensation Scheme. It also provides some further investment in the Bank’s critical infrastructure and projects and to support under-resourced key areas.

Variation to the Reserve Bank of New Zealand Funding Agreement

  1. This amendment agreement is between the Minister of Finance and the Reserve Bank of New Zealand (“Bank”) pursuant to section 209 and schedule 1, clause 18 of the Reserve Bank of New Zealand Act 2021 (“the Act”).  It amends the 2020-25 funding agreement signed on 16 June 2020 (“the 2020-25 funding agreement”).
  2. This amendment agreement takes effect from the date that it is signed.

It is agreed that

  1. The 2020-25 funding agreement is amended as follows:
  • the amount to be applied in meeting operating expenses under paragraph 3 for the year commencing 1 July 2023 is increased by $48,113,000, from $115,400,000 to $163,513,000; and
  • the amount to be applied in meeting operating expenses under paragraph 3 for the year commencing 1 July 2024 is increased by $31,140,000, from $118,300,000 to $149,440,000.

Hon. Grant Robertson
Minister of Finance
31 July 2023

Professor Neil Quigley
Board Chair of the Reserve Bank
22 August 2023

Adrian Orr
Governor and Board Member of the Reserve Bank
22 August 2023

Pooling of expenditure allowances

The current 2020-25 funding agreement for the Reserve Bank of New Zealand (Reserve Bank) provides for direct net currency issue expenses separately from other expenditure of the Reserve Bank.
 
For the final two years of the previous 2015-2020 funding agreement, I had agreed that the Reserve Bank could treat these as a single aggregate pool for expenditure, which enabled the Reserve Bank to apply its underspend on currency issue expenses to fund specific unforeseen expenditure, such as asbestos remediation. 


I understand the Reserve Bank has continued to aggregate its expenditure and wants confirmation this practice can continue for the two remaining years of the current 2020- 25 funding agreement. 


I confirm that the Reserve Bank may continue to apply its underspend on currency issue expenses to other operational expenditure for the remainder of the current 2020- 25 funding agreement.
 
Hon. Grant Robertson
Minister of Finance
3 July 2023
 
The Reserve Bank agrees with the Minister to vary the 2020-25 Funding Agreement as set out above, in accordance with section 209(4) of the Reserve Bank of New Zealand Act 2021.
 
Professor Neil Quigley
Board Chair of the Reserve Bank
22 August 2023
 
Adrian Orr
Governor and Board Member of the Reserve Bank
22 August 2023