Wellington | New Zealand on Thursday announced a worse-than-forecast budget deficit as a slowing economy and a lower tax take hit its coffers, leaving the Labour government walking a tight rope as its spending plan is expected to fan inflationary pressures.

In his last budget ahead of what is set to be a close-run election in October, finance minister Grant Robertson announced billions towards rebuilding infrastructure following severe weather events at the start of the year and towards helping those struggling with increased living costs.