By FAY SIMMONS

TRIBUNE BUSINESS REPORTER

jsimmons@tribunemedia.net

A WELL-KNOWN banker has warned that the Government's planned switch to accrual accounting could expose a weaker underlying fiscal position than its current headline surplus figures suggest.

Gowon Bowe, Clearing Banks Association chairman, said the issue was not whether the Government's borrowing was being concealed, but how money borrowed and subsequently channelled to public-sector entities was being treated in its accounts.

The latest public debt bulletin shows central government debt stood at $12.466bn at end-June 2026, while debt owed by agencies and government business enterprises reached $2.23bn.

Mr Bowe said the Government's treatment of money provided to state-owned enterprises increasingly crossed into the territory of accrual accounting, creating questions about whether the administration was applying accounting principles consistently.

“What is not as transparent, and what certainly requires greater discussion, is the accounting treatment for when government has effectively distributed or allocated these resources,” he said.

“Because when they say that they have it as an investment in the investment fund, or they say it's a loan to a public sector entity, you're now crossing into the realm of accrual basis accounting.”

Mr Bowe said the Government could not selectively apply accrual principles when they produced a more favourable fiscal outcome.

“We have to be very, very careful that we are not seen to be picking accounting policies or practices for the simple benefit of achieving an outcome that may have been committed,” he said.

“To be consistent, it's either accrual or cash basis.”

He said a move to accrual accounting would not simply mean recognising more Government liabilities, as the administration would also have to properly account for its assets.

“Accrual basis accounting is not saying solely record all your liabilities. It is saying record all of your assets and liabilities,” said Mr Bowe.

That would require the Government to value assets ranging from Crown land and roads to airports, seaports, buildings and other infrastructure, he added.

Mr Bowe said this could ultimately strengthen rather than weaken the country's financial presentation because the Government currently does not fully document the value of assets available to back its liabilities.

“The hope is that we certainly have far more assets than we have liabilities,” he said, pointing to the value of Crown land and other Government-owned infrastructure.

He said the transition would require trained personnel, appropriate systems and reliable data and was therefore “not a flip the switch” exercise.

However, he said the Government could not use data availability as a permanent reason for delaying the change.

Mr Bowe also warned against focusing too heavily on the political debate over whether the Government records a surplus or deficit.

“I think there is too much political fanfare around surplus and deficit,” he said. “What is more important is the trajectory.”

He said the more important questions were whether deficits were declining, debt could continue to be financed and if the Government had a medium- and long-term plan to generate revenues to repay its obligations.

His central concern, however, was the treatment of money borrowed by Government and then provided to entities that have little realistic ability to repay it.

“If we have receivables being recorded that have no prospect of collectability, even if you consider them an asset, they are an actual unrealizable asset, and accounting standards would say you have to write them off immediately in any event,” he said.

That issue is particularly relevant to the Government's funding of state-owned utilities, which forms part of the latest public debt figures.