The Government's cash deficit has blown out to nearly $6 billion in the first seven months of this financial year.
The cash deficit is about $1 billion worse than Treasury forecast in October and has resulted in heavier government borrowing to cover the shortfall.
Gross debt as a proportion of gross domestic product - the national measure of economic activity - had jumped to 25% at the end of January.
However, net debt is lower than expected at $2.3 billion because changes in exchange and interest rates have increased the value of financial assets held by the Government.
Overall, the public finances are getting worse.
The Treasury says the tax take continued to fall in January. It resulted in an operating deficit of $5.5 billion for the seven months, much worse than the December update forecast of a $3.6 billion deficit.
The Treasury says the deficit is largely due to more than $3 billion worth of investment losses, and $3.1 billion in losses due to revaluations of workplace accident insurance liabilities.
Finance Minister Bill English says the recession and a worsening of the Accident Compensation Corporation's books have contributed to the growing deficit in the public accounts.
Mr English says the accounts show that, since December, ACC's outstanding claims liability increased by $700 million. He says that figure feeds into the operating deficit and eventually will have to be paid for.