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New Zealand's finances sank deep into the red in the year to June as a result of recession and the impact of the global economic crisis, official figures showed Wednesday.
The government's operating balance was a deficit of 10.5 billion dollars (7.7 billion US), the figures showed, a 12.9 billion dollar turnaround from the year before.
"We cannot afford for these trends to continue indefinitely," Finance Minister Bill English said.
New Zealand sank into recession at the start of last year and the downturn was aggravated by the effects of the global financial crisis in the latter part of 2008.
The effects of the crisis saw the value of government investments and assets fall by 4.1 billion dollars.
Tax cuts in October 2008 and April this year slashed revenue by three billion dollars and welfare spending rose by 1.5 billion dollars due to the effects of the recession.
The government is forecasting cash deficits of between 10 billion and 12 billion dollars over each of the next four years, with total debt forecast to double by 2013.
"That means by 2013, total interest costs are forecast to top 5.4 billion dollars a year -- more than the combined annual spending on law and order and defence," English said.
New Zealand posted 0.1 percent economic growth in the June quarter following five quarters of shrinking gross domestic product, but English said a pickup would not be enough to put the government books back in the black.
Economic growth of two to four per cent in the next few years was already built into the forecasts.
"A pick up in growth does not make this go away," English said.
