Australia reported a slight narrowing of its deficit to Aus$43.7 billion (US$45.4 billion) on Monday but warned that plunging commodities prices were hitting plans to return to surplus next year.
Treasurer Wayne Swan said the final deficit figure for the year to June 30 2012 had come in below the Aus$44.4 billion forecast in May, with taxation receipts booming as a result of solid wage and employment growth.
But he said there had been a "hefty" Aus$876 million fall in corporate taxes due to ongoing jitters from the financial crisis and warned of the budget impact of lower commodity prices due to the slowdown in China and Europe.
"Commodity prices have declined somewhat in recent months, and they do remain substantially lower than what we factored into our budget forecasts," Swan told reporters.
"This will hit government revenues significantly, which does make it harder to deliver a budget surplus. It does mean we will have to find more savings."
Centre-left Labor has been committed to returning the budget to surplus in 2012-13, hoping it will improve its standing with voters.
It vowed an ambitious Aus$33.6 billion in cuts in the May budget including significant reductions in military spending and foreign aid, targeting a modest Aus$1.5 billion surplus for the fiscal year ending June 30 2013.
Swan said the final Aus$43.7 billion deficit compared with the earlier forecast of Aus$44.4 billion for 2011-12 was the "smallest variation between the budget estimate and the final outcome for a decade."
It represents three percent of Australia's gross domestic product, which he said was "less than half the average budget deficit recorded for the major advanced economies in 2011" and compared with 10 percent of GDP in the United States.
Australia was the only advanced economy to dodge recession during the global downturn thanks to its resources exports to fast-growing Asia.
But Europe's debt woes and a slowdown in China has seen Australian growth halve in the three months to June to 0.6 percent, while several mining projects have been shelved.