Treasurer Jim Chalmers will come close to delivering a shock third budget surplus this year, even as new research showed state and federal government debt repayments were on track to reach their highest share of economic activity in at least two decades.

While Treasury’s pre-election fiscal outlook in April predicted the budget would record an underlying deficit of $27.9 billion in 2024-25, new figures from the Department of Finance on Friday showed the deficit shrunk to just $5.5 billion in the 11 months to May.