Wellington, Jul 6 (IANS): The New Zealand government Friday welcomed "encouraging" indications of a shrinking deficit, but sounded a cautious note over the state of the global economy.

Figures released by the New Zealand Treasury showed the deficit for the 11 months ending May at 5.9 billion NZ dollars ($4.73 billion), which was 1.1 billion NZ dollars, or 16 percent, lower than forecast in the government's budget in May, reported Xinhua.

The difference was due to tax revenue for the 11 months being 667 million NZ dollars, or 1.3 percent, higher than forecast and core government spending being 431 million NZ dollars, or less than 1 percent, below the forecast of 62 billion NZ dollars.

At the end of May, net debt stood at 49.6 billion NZ dollars, which was 24.6 percent of GDP, while gross debt stood at 79.7 billion NZ dollars, or 39.5 percent of GDP.

Finance Minister Bill English said the figures were "encouraging, but the global environment remains uncertain, leading to a number of fluctuations in the tax take from month to month".

Revenue was still 835 million NZ dollars below the Treasury's forecast in October last year.

"These fluctuations reinforce the need for the government to keep a firm control on its costs, so it can stay on track to surplus by 2014-2015," English said in a statement.

"We have seen moderate strength in the economy over the past year despite considerable disruption from global uncertainty," he said.

"Balancing the books and returning to surplus is one of the most important things the government can do to build resilience, as well as to take pressure off interest rates and the exchange rate. This helps make our economy more competitive."