The Minister of Finance says the Government has still got its work cut out to return its books to surplus by 2014/15, despite some signs of improvement in its finances.
A key measure of the Government's finances, the deficit before gains and losses, bettered Budget forecasts for the second consecutive month in May.
The operating deficit before gains and losses on its investments was $5.9 billion in the 11 months to the end of May.
The result was 16% smaller than forecast in the Budget as the Government took in more taxes and reduced its spending.
Tax revenue rose 1.3% to $667 million, including an extra $200 million collected from companies. The amount collected from GST was also ahead of forecasts, with private consumption higher than expected.
Once gains and losses on the Government's investments was taken into account, the operating deficit was $10.9 billion, or 8%, worse than forecast. This was due to accounting changes which pushed up the value of ACC's future liabilities.
In the 10 months to the end of April, the deficit had been 19% better than forecast.
The Government's net debt stands at $49.6 billion, just under a quarter of gross domestic product (GDP).
Finance Minister Bill English says the accounts remain weaker than forecast before the election in November last year and getting back to surplus will not be easy.
Mr English says the amount of tax collected has been less than what the Government expected a year ago, but is stabilising.
He says the surplus target is achievable, but any deviations from forecasts in revenue or spending in the next three years could blow it off-course.
"The pattern through this year has been that expenditure is reasonably under control. We are collecting less tax than we expected 12 months ago, but it's stopped dropping.
"We are still focused on getting into surplus in 2014/15, but we have to stay on track for two or three years to achieve that."