The New Zealand government's operating balance before gains and losses (OBEGAL) for the seven months ended January 31 was NZ$600 million, which was NZ$800 million below the pre-election update and NZ$300 million below December forecasts, Treasury said. Tax revenue and receipts during the period were NZ$500 million lower than the pre-election forecast.

Meanwhile, Treasury also disclosed a NZ$15.4 billion rise in Gross Sovereign Issued Debt to NZ$45.4 billion (25.3% of GDP) from the pre-election forecast. This included fresh Reserve Bank bill issuance to mop up the liquidity from lending to the banks against securitised mortgages.

Extra government borrowing and 'derivative liabilities' were also blamed, although Treasury said increased financial assets, including the securitised bank mortgages, meant net debt had improved by NZ$1.4 billion from the pre-election update.

The latest figures put extra pressure on the National government to abandon its planned tax cuts and drop its contribution to the New Zealand Superannuation fund. Labour has recently said it would support the government if it deferred the April tax cuts because of the rapid deterioration of the global economy. Prime Minister John Key has said the cuts will go ahead.

Government's operating deficit, including gains and losses, was NZ$5.5 billion. This was well below the pre-election forecast of a NZ$2.6 billion surplus (a difference of NZ$8.1 billion), and below the December forecast of a NZ$3.6 billion deficit.

"The main contributors to this result were lower than forecast tax revenue (NZ$0.5 billion), higher than forecast investment losses (NZ$3.2 billion), and actuarial losses on both the ACC outstanding claims liability (NZ$3.1 billion) and GSF net pension liability (NZ$0.9 billion)," Treasury said.