The International Monetary Fund believes the New Zealand economy has got through the global financial crisis in better shape than many other countries.
But in its report on New Zealand, the IMF warns the Government should now show more spending restraint to get the books back into surplus sooner.
The IMF also warns that the country's current account deficit - the difference between what it earns and spends overseas - is likely to get bigger, particularly if the value of the New Zealand dollar remains high.
It estimates that the dollar is overvalued by between 10% and 25%.
The report says the New Zealand economy remains vulnerable to risk but the IMF still expects it to continue its gradual recovery, growing by nearly 3% a year in 2010 and 2011.
Finance Minister Bill English says he welcomes comments in the report that shifting the tax burden from income tax to consumption would raise the incentives to work and invest.
Mr English says the Budget in May will set out the Government's next steps aimed at getting the economy growing faster.