An Australian government budget update due on Tuesday is expected to show a significant blowout in this year's deficit, which is already forecast to be $A22.5 billion.
Federal Treasurer Wayne Swan says the economic turmoil in Europe has affected Australia's economy.
It is understood the update will write down government revenue by another $A20 billion over earlier estimates.
However, the ABC reports the government is expected to outline billions of dollars in spending cuts or deferrals to keep its promise of returning the budget to surplus next financial year.
Mr Swan says the update will strike a balance between fiscal discipline and supporting jobs.
Opposition finance spokesman Andrew Robb says the budget update needs to show how the Australian economy would cope if the global situation deteriorates.
He says the government has not done enough to prepare Australia for the economic turmoil in Europe.
Future Fund chairman David Murray says it is important for the government to cut spending.
