Deficit forecast raises fear of cuts in New Zealand gov't budget

The New Zealand government's self- imposed target for a budget surplus this financial year appeared to shift further out of reach Monday with Treasury figures showing a deficit for the nine months to the end of March.

The Financial Statements from the Treasury showed an operating deficit of 358 million NZ dollars (265.74 million U.S. dollars)-- 856 million NZ dollars (635.41 million U.S. dollars) stronger than it forecast in December -- but still shy of the government's targeted surplus this financial year.

The lower deficit figure reflected higher than forecast tax revenue mostly from corporate and individual taxes and lower than anticipated core government spending, said a statement from the Treasury.

Finance Minister Bill English, who delivers his seventh annual government budget next week, said the Treasury forecasts for the budget would show "a small deficit" for 2014-2015.

"Treasury's latest forecasts have tax for the 2014-2015 year lower than forecast at Budget 2014, primarily due to lower inflation which currently sits at 0.1 percent in the year to March, " English said in a statement.

Opposition lawmakers said the figures showed the government had lost its economic credibility and pointed to the seventh operating deficit in a row this financial year.

The main opposition Labor Party said the ongoing fall in dairy prices meant that 2015-2016 financial year surplus was also in doubt -- despite economic growth of more than 3 percent.

"Too many Kiwis are missing out on jobs and opportunities. When that happens, less tax is collected and it becomes a struggle to make surplus," Labor finance spokesperson Grant Robertson said in a statement.

The opposition Green Party said the government was paying for cuts in taxes for top earners.

The government would have "few options other than to increase debt and cut spending wherever possible in next week's budget," Green Party co-leader Russel Norman said in a statement. Endi