The Government has confirmed it is still on track to return to surplus by the middle of 2015, underpinned by the expanding economy.
It said annual activity is set to peak at 3.6 per cent by March 2015, driven by the rebuilding of Canterbury, before easing to average 2.3 per cent in the following five years.
In its Half Year Economic and Fiscal Update released today, the Treasury upgraded its forecasts of economic growth.
The stronger economy is reflected in the Crown's books, with the deficit forecast to decline to $2.3 billion in the 2014 March year, before returning to growing surpluses in following years.
A small surplus of $86 million is expected in the June 2015 financial year, compared with a $75 million surplus forecast in May's Budget.
Finance Minister Bill English confirmed new spending of $1 billion for next year's Budget, with most of that earmarked for health and education.