Finance Minister Bill English says he expects the Government's' deficit will be between $10 billion and $12 billion this financial year.
However Mr English says fluctuations in the Government's accounts are manageable and are not having a significant effect.
The operating deficit before gains and losses has widened to $6.1 billion in the nine months to the end of March.
That is 15%, or nearly $800 million, higher than the deficit forecast in the Pre-Election Fiscal Update in October last year.
The Government says the larger operating deficit is due to lower than expected tax revenue and new liabilities arising from another earthquake in Christchurch on 23 December.
Mr English says the Government is still working towards a return to surplus by the 2014/15 financial year.
He told Morning Report that keeping good control of the Government's long-term costs in areas such as law and order and welfare are among the drivers for getting back to surplus.
"Our expectations around tax revenue over the next twelve months, or the next couple of years, are that it'll be driven by moderate growth."
Treasury is forecasting a deficit of nearly $10.8 billion in the full year to the end of June, though some economists expect it to be closer to $14 billion due to the weaker economy on the tax take.
Mr English says he expects it to be in line with Treasury expectations despite a sluggish second half of 2011.
Labour Party finance spokesperson David Parker says returning the Government's books to surplus won't cure the underlying problems in the economy and what is really needed is more exports, savings and