After presiding over almost a decade of buoyant accounts, Finance Minister Michael Cullen has sailed into an international crisis that has changed the face of his numbers.
International turmoil and the slowing domestic economy have conspired to send the Government's books into an ugly tailspin - and that's even before the events of the past month are taken into account.
The Treasury is still forecasting the country will return to positive economic growth in the final quarter of this year but it is forecasting a deeper slowdown than it did in May's Budget.
All the indicators are heading in the wrong direction.
Unemployment is forecast to rise to 5.1 per cent in 2010 and so the cost of benefits is also tipped to rise.
House prices are expected to continue falling in nominal terms - recording a total fall of 11.3 per cent from their peak in the December quarter of 2007.
The slowing economy means the Government will be pulling in less tax revenue and it will start to run big cash and operating deficits.
Cash deficits will balloon to $5.9 billion in the 2009 year, rising to $6.8 billion in 2012 and $7.3 billion in 2013 - virtually double what was forecast in the Budget just five months ago.
With growing cash deficits comes rising debt. Dr Cullen has a target for debt to be around 20 per cent of gross domestic product but it is forecast to rise to 24.3 per cent by 2013.
On an even longer-term horizon, the Treasury says debt could get as high as 30 per cent of GDP.
Excluding gains or losses made by the New Zealand Superannuation Fund among other things, the operating balance excluding gains and losses (OBEGAL) turns into a deficit of $31 million in the current year and worsens to $3.2 billion by the end of 2013.
Significantly, the Treasury's forecasts predict there won't be an OBEGAL surplus again for 10 years - in 2018.By Paula Oliver Email Paula