Finance Minister Bill English has signalled the prospect of the Government books returning to surplus by 2016 is highly unlikely.
While that had been the Government's intention, Prime Minister John Key indicated in April he would like to see New Zealand returning to surplus sooner than that.
However, Mr English says since then the Government has had to deal with the impact of the devastating Christchurch earthquake in February at an estimated cost of $8.5 billion.
Mr English says the Government is committed to returning to surplus, but that target is more difficult than it anticipated.
The minister told Checkpoint on Tuesday the Government had been looking at five or six years to surplus, but since then has had the extra costs of the quake at 7% or 8% of gross domestic product.
The National-led Government is now borrowing $380 million a week - but the Prime Minister says this has to stop. Mr Key told Parliament on Tuesday the Government is borrowing more than it needs to take advantage of lower interest rates.
Mr Key's admission comes as the latest financial statements reveal a $10.167 billion deficit, excluding investment gains and losses, for the nine months to March.
Mr English told Parliament on Tuesday the operating deficit takes account of some of the impact of the Canterbury quakes in September 2010 and February this year.
However, the figures do not include the full cost of the quakes, nor the potential liability of bailing out AMI policyholders.
In April, the Government agreed to a $500 million financial backstop package for AMI after the insurer admitted it might not have enough in reserves to pay claims from the quake.
In the nine months to the end of March, the cash deficit was $12.4 billion. Mr English says for the full financial year the deficit is expected to rise to between $16 billion and $17 billion.
Mr English says the financial situation is much worse than that which confronted National when it first formed the Government and it cannot continue to run cash deficits indefinitely.
Investment gains boost finances
Big investment gains by the New Zealand Superannuation Fund and ACC kept the operating deficit lower than expected.
In the nine months to March, the operating deficit was $3.340 billion - nearly $4 billion lower than forecast in December.
However, once the Superannuation Fund and ACC investment gains are removed, the deficit was 15% higher than forecast by Treasury at $10.167 billion.
Most of that difference is due to the Earthquake Commission's $1.5 billion estimated share of the cost of the February quake, though it does not include the support package for AMI.
The Government's net worth of nearly $91.612 billion was, however, better than expected.
The Budget will be delivered on 19 May.
