The Government's operating deficit has widened in the first half of the financial year but the shortfall is largely in line with expectations.
The operating balance before gains and losses (OBEGAL) was a deficit of $889 million in the six months ended December 31, up $92m from the $787m forecast according to the government's financial statements released today.
It was $101m better than at the same period last year with tax revenue growing by 3.3 percent while expenses increased by 2.5 percent.
Finance Minister Bill English said the half-year results illustrate that the government has spending under control.
"Although revenue is slightly under forecast, we are keeping a tight rein on what we can control - our spending," Mr English says.
The Treasury predicts the Crown's OBEGAL will slip back into deficit in the 2016 financial year before returning to smaller surpluses further out as tepid inflation and a lack of wage growth keeps taxes flatter than expected.
"Our focus is now firmly on reducing debt which is reflected in our target of reducing net government debt to around 20 percent of GDP in 2020."
Net debt increased by $1.1b to $66.9b - 27.5 percent of GDP - in the last year but gross debt shrunk by around $700 million to $85.7b.