Prime Minister John Key hinted on Monday that the Budget will include greater-than-expected spending cuts.
However, Mr Key also indicated spending in some areas will be higher than anticipated.
Finance Minister Bill English is set to deliver the bleakest but most important budget for the New Zealand economy in years.
Mr English must set out in his first budget how he will rein in rising government spending and debt, at a time when government revenue is rapidly shrinking, as Standard & Poor's considers downgrading the country's AA+ foreign currency rating.
Mr Key says though much of the Budget has been foreshadowed, there will still be some surprises on Thursday.
He says people might be surprised by how much the Government will be saving through its review of spending, but also by how much it is spending on insulating homes.
Mr Key remained confident that once international credit agencies see the Budget they will not downgrade New Zealand's rating.
He says the Budget will show the Government getting its debt under control, while at the same time maintaining existing entitlements.
Radio New Zealand's political staff say tax cuts planned for 2010 and 2011 are likely to be deferred and the Government's contribution to the Superannuation Fund will be reduced.
Business New Zealand and Federated Farmers say bringing government spending under control is the top priority.
The Council of Trade Unions wants better support for the growing numbers of unemployed and says a sensible approach should be taken to cutting expenditure.
Cuts to new spending advocated
Westpac chief economist Brendan O'Donovan says one of the most effective ways the Government could reduce expenses is to cut the allowance for new spending in future budgets.
Deferring the 2010 and 2011 tax cuts would will save about $1 billion a year, he says.
If the full superannuation contribution was delayed it would save about $2 billion a year, but Mr O'Donovan believes the Government will only delay about half of that.
He estimates the Government has already saved about $500 million by reprioritising spending.
Mr O'Donovan says in the last budget there was an allowance for new spending of about $1.75 billion in the coming year, which was due to rise by about 2% per annum.
He says the Government is now likely to cut that in half, saving about $10 billion over a four-year period. Government figures will show debt peaking at about 35% of gross domestic product.
Mr O'Donovan expects the Budget's figures will show the economy contracting 1% in 2009 and 3.5% in 2010, much more severe than even the worst-case scenario in Treasury's December update.
He says it is also likely to revise the prediction of where unemployment will peak to 8%, up from 7.5%.
