The Government's accounts are in worse shape than predicted in the pre-election forecast in October.
The operating deficit for the six months to the end of December was $9.4 billion, nearly 40% more than the $6.8 billion deficit forecast before the election.
The blowout is mainly due to higher-than-expected losses on the Government's investments and actuarial changes to the Government Superannuation Fund's future liabilities.
Tax revenue was $400 million lower than forecast in the October update, and revenue overall was $743 million lower.
Lower revenue was partly offset by the Government spending $887 million less than forecast.
Once gains and losses on Government investments are excluded, the operating deficit was in line with the October forecast at just over $4 billion.
Finance Minister Bill English says updated forecasts for slower growth released last week show the Government needs to keep a lid on spending if it is to hit its target of returning to surplus in 2014/15.
But he says the underlying health of the books has improved and is now roughly in line with forecasts.
He says the blowout in the operating deficit is explained by accounting changes and volatility in the Government's investments.
Labour Party finance spokesperson David Parker says any month-to-month improvement in the underlying deficit masks bigger problems.
He says the Government should pay more attention to the country's overall indebtedness, rather than just its own.