The government's books have plunged $3.5 billion into the red - $5 billion worse than forecast - on the back of the global financial meltdown, according to the crown accounts.
The government's financial statements shows the crown operating balance was $3.5b in deficit at October 30, against a forecast surplus of $1.5b.
Treasury deputy secretary Peter Bushnell said the main reason for the worse than expected result in the monthly update was unrealised losses on government investments as a result of severe turbulence on global sharemarkets.
The losses were $4.3b greater than expected.
The worst hit was the New Zealand Superannuation Fund which took a $3.5b hit, while ACC suffered $600 million in losses and the Earthquake Commission $200 million.
The separate Government Superannuation Fund and ACC also recorded losses of $1b and $400m respectively as a result of revaluations of liabilities.
However once unrealised investment losses are stripped out the operating balance it comes in at $898m in surplus - $117m better than forecast.
The cash deficit was $900m better than expected, coming in at $3.7b due to delays in transferring $700m to the previous government's Fast Forward research fund and higher than expected petroleum mining royalties.
The accounts show gross crown debt climbing $3.1b higher than expected to $33.6b - 18.8 percent of GDP.
Net core crown debt was $1.9b lower than forecast at $2.2b mainly due to the lower than expected cash deficit and higher than forecast circulating currency.
Tax revenues overall were about $400m more than forecast, but that was probably due to timing issues, Treasury said.
