The Government's finances are in better shape than Treasury forecast three months ago.
The deficit is $1.3 billion for the six months to the end of December, $3.6 billion better than expected.
The operating deficit was lower than expected due to a strong performance by the New Zealand Super Fund, which was $1.7 billion higher than forecast due to rising world sharemarkets.
Excluding investment gains, the deficit was $5.7 billion, $169 million better than forecast.
The tax take was $163 million dollars higher than forecast, although Treasury says it is unsure whether that is due to an improvement in the economy or forecasting errors associated with October's tax changes.
The higher income tax revenue more than offset lower GST returns.
The cash deficit was $13.1 billion, half a billion higher than forecast, due to earlier than expected payments to district health boards.
Net debt totalled $40 billion, or 21% of gross domestic product.
Finance Minister Bill English says the Government will continue to take a tough stance on spending, with the cash deficit still on track to hit $15.6 billion this financial year, the highest since the Government came to office.
Mr English says the Government needs to keep both the deficit and interest rates down so firms can create jobs by investing more.
The Government aims to bring the country's budget back into surplus by 2015.
