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Morrison still confident of 2021 surplus

AAP logoAAP 19/12/2016 Colin Brinsden, AAP Economics Correspondent

Treasurer Scott Morrison is confident he can still get the nation's finances back into the black by 2021, despite a deterioration in the interim.

The mid-year budget review released on Monday shows a tiny improvement in this year's financial position from a deficit of $37.1 billion at the time of the May budget to $36.5 billion.

However, over the next three years the bottom line worsens by just under $11 billion.

By 2019/20 the deficit will still be $10 billion.

"The government's plan to restore the budget to balance remains on track," Mr Morrison and Finance Minister Mathias Cormann said in a joint statement.

The report says recent higher iron ore and coal prices will help support tax revenues, but this will be more than offset by weaker wage and non-mining company profits.

"The strength and volatility of commodity prices have presented a particular challenge in framing the forecasts and projections," they said.

"After extensive industry and market consultation, Treasury judged it prudent to adopt more conservative assumptions for bulk commodity prices than usual."

Despite the many global and domestic challenges facing Australia the total deficit over the next four years of $94.9 billion is better than it was a year ago when it stood at $108.3 billion.

"As we tackle the deficit legacy we also continue to arrest the debt," they say.

Economic growth forecasts have also been cut in the wake of the recent national accounts which showed the economy shrinking and posting its worst performance since the 2008-2009 global financial crisis.

Growth is now forecast to be two per cent in 2016/17 rather than 2.5 per cent as previously predicted.

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