The Government's budget deficit has blown out by $637 million, mainly because of a fall in tax revenue from most sectors.

The Treasury today released the financial statements for the seven months to the end of January, showing the operating balance before gains and losses was $1.1 billion - more than twice the $426m deficit forecast in the December update.

Acting chief government accountant Fergus Welsh said the lower tax take - $876m below forecast - was partly offset by lower core expenses and higher returns from Crown entities.

"At this stage, it is difficult to determine how much of the lower than forecast tax is temporary versus permanent, but we expect this to become clearer over the next few months," he said.

"Timing issues are likely to see some of the current variance narrow by year end."

Factors contributing to timing issues included mismatching of GST refunds and receipts relating to export products and the Canterbury rebuild.

Tax revenue from some large corporate taxpayers was not yet "visible" to Inland Revenue because of tax pooling schemes.

Strong sharemarkets saw gains on financial instruments of $2.8b, $1.3b ahead of forecast. As a result, the operating balance surplus was $629m higher than forecast at $3.4b.

Net debt was $631m higher than forecast at $59.9b, equivalent to 27.7 per cent of gross domestic product.

Finance Minister Bill English said the Government remained on track to return to surplus next year, but he acknowledged that revenue was still some way below forecast.

"This makes it even more important for the Government to continue carefully managing its spending as we target a return to surplus next year," he said.

"While we have spending under control, government revenue can move around and is therefore more difficult to forecast."

He said a return to surplus was "a challenging goal", and the need for discipline remained.

"The extent to which tax revenue is likely to remain below forecast will become clearer as officials work through forecasts for the Budget," he said.

Labour finance spokesman David Parker said the past three months of financial statements showed the books were worse than expected, raising questions about National's management of the economy.

"If the economy is recovering, the tax take should be increasing and the deficit reducing. The opposite is happening," he said.

"Serious questions need to be asked of National's economic credibility."

In November, December and January, National's books were worse than predicted, he said. At the same time, National MPs "have been hyping the economy up to the rafters".

In November and December, the Treasury said there were timing issues.

"But the third time, even Treasury admits it doesn't know why the books are even more in the red," Parker said.