The New Zealand government has reported a smaller-than-expected deficit in the four months to October 31.
Treasury accounts released on Friday show the deficit at $NZ1.75 billion ($A1.61 billion), $NZ400 million lower than forecast.
Finance Minister Bill English says revenue was slightly higher than expected and spending was lower.
"The result continues a trend over the past year of the government's fiscal results exceeding forecasts as we remain on track to return to surplus in 2014/15," he said.
However, Mr English says returning to surplus is still a significant challenge.
"Although the economy is improving and revenue is increasing, there are a lot of other large influences on the government's books," he said.
"These include a growing prominence of financial assets and liabilities, which expose taxpayers to greater volatility."
The half-year economic update, due to be released on December 17, would contain a full set of new forecasts, he said.
