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The government will have to borrow $40 billion over the next four years - $250 million a week - after one of the worst fiscal years on record, Finance Minister Bill English says.
The Treasury on Wednesday released the government's final accounts for the year ended June which revealed a $10.5 billion deficit compared with a $2.3 billion surplus in 2008.
The recession was mainly to blame and Treasury said it was the worst budget turnaround on record.
Tax revenue went down by $1.3 billion while investment losses cost $4.1 billion.
The signs of gaping holes in the books were beginning to appear in July 2008 when the Treasury predicted cash surpluses would be a thing of the past for the foreseeable future.
Then the world was hit by the credit crisis and the collapse of major international financial institutions which brought on the global recession.
English told Parliament the government's deficit was a combination of the recession and the "reckless spending policies" of the previous government.
That was fiercely rejected by Labour MPs, who said the last government delivered the lowest unemployment in New Zealand's history and the economy was prudently managed throughout its nine years in power.
English said it was going to take 20 years to recover from the present situation.
"The government expects that Crown debt will double by 2013," he told Parliament.
"In total, the New Zealand government will need to borrow about $40 billion over the next four years. That means we will need to raise $250 million per week for the next 200 weeks."
Over the next four years the cost of debt servicing would rise from $2.5 billion to around $5 billion.
English said the increase would be more than twice the size of the whole police budget.
