The government's finances are in much better shape than expected with strong domestic spending propping up the tax take.
Consumer spending lifted GST revenue and the stronger labour market boosted the income tax take. Photo: 123RF
Official figures show a deficit of $3.98 billion for the six months ended December, 33 percent lower than forecast.
The strength of consumer spending lifted GST revenue by 5 percent, while income tax revenue was ahead of forecast because of the stronger labour market.
The total tax take was $45.3b, up 1.9 percent on forecast, while government expenses were $53.3b, slightly lower than forecast.
Finance Minister Grant Robertson said the government was in a financial position to cope with any resurgence of Covid-19.
"We will continue our balanced approach to managing the economy, giving room to provide support to protect New Zealanders from Covid-19 and its impact, while also providing support to those who need it the most."
Government net debt was $104.5b, 32.6 percent of the value of the economy.
Forecasts in the half year update have net debt hitting nearly 40 percent of GDP and the budget deficit reaching $21.6b.