The Government's Budget was $400 million further in the red than forecast at the end of November, Treasury said today.
The operating deficit before gains and losses was $2.3 billion for the first five months of the financial year show.
Officials said the variation was mainly due to tax revenue being $514m lower than expected but that was tipped to reverse in coming months.
Continued strength in share markets around the world saw big gains for the Government's financial investments of $2.8b, which was $2b ahead of forecast..
That took the operating balance to a surplus of $2.3b - $1.6b higher than forecast. .
Net debt at $59.6b or 27.6 per cent of gross domestic product was close to forecast.
The figures included the sale of Air New Zealand shares which raised $365 million and saw a gain on disposal of about $52m.
When ACC and NZ Superannuation Fund investments in Air NZ are removed from the equation the estimated gain on disposal reduced to $46m.
Finance Minister Bill English said the books were still on track to reach surplus in the 2014-15 year, "but, as we have said many times before, this remains quite a challenge" .
"In particular, we need to remain focused and disciplined and now is certainly not the time to get loose with spending and fiscal policy - as some political parties are advocating," he said.
- Fairfax Media