The government's finances are bearing up better than expected as strong domestic spending has propped up the tax take.
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Official figures show a deficit of $3.2 billion for the three months ended September, compared with a pre-election forecast in September for a deficit of $6.4bn.
The Treasury said tax revenue for the period was more than $2bn above forecast as domestic spending surged and the wage subsidy preserved jobs and income tax.
Finance Minister Grant Robertson said the stronger than expected finances were a vindication of the government's response to the pandemic.
"The government's decision that the best economic response to the Covid-19 pandemic was a strong health response has proved time and again to be the right one.
"Those decisions helped us keep kiwis in jobs and mean we are now in a strong position to drive the economic recovery," Robertson said.
However, extra borrowing has sent debt levels surging, with net debt rising to $94bn, about 30.5 percent of the value of the economy, although that has also beat the forecast 31.7 percent.
The pre-election update forecast the budget deficit to hit $31.7bn by the end of the financial year in June, with debt hitting 43 percent of gross domestic product.
Official forecasts will be revised in next month's half year economic and fiscal update.