New Zealand on Thursday bucked the international trend toward austerity budgets and lifted spending modestly, while still predicting its books will be back in the black within two years.
Finance Minister Bill English said that after taking a battering from the global financial crisis and the deadly Christchurch earthquake in 2011, prospects were looking good for New Zealand's economy.
"Budget 2013 enhances the momentum that is building across the New Zealand economy," he said.
"That momentum can be seen in some recent favourable data and can be felt in a growing sense of confidence and security about our economic position."
English said the farm-reliant economy, which generates gross domestic product (GDP) of NZ$140 billion (US$115 billion) a year, was set to expand 2.3 percent in 2013-14.
He said the figure would have been closer to 3.0 percent but for an ongoing drought and growth was expected to continue through to at least 2015-16.
"New Zealanders can look to the future with well-earned confidence and optimism," he said, adding that economic growth was "higher than almost every other developed country".
He said the government was on track to achieve its long-standing goal of eliminating the deficit -- NZ$6.29 billion this year -- by 2014-15.
However, Treasury figures predict it will only just scrape into the black with a NZ$75 million surplus, rising to NZ$797 million in 2015-16.
The two previous budgets have contained no new net spending in a bid to rein in debt but English relaxed the purse strings slightly this year, allowing NZ$3.6 billion for new initiatives over the next four years.
More than a third of that went to the health system, which the government said was facing demographic and cost pressures, with education, science and tourism the other major beneficiaries.
However, with an election not due until late 2014, most pundits expect any large voter-friendly spending programmes to be held in reserve for next year's budget.
New Zealand had its long-term currency rating downgraded a notch to "AA" from "AA+" in late 2011 over fears about its soaring external debt and English said the government was making progress addressing the problem.
He said government debt was expected to peak at 28.7 percent of GDP in 2014-15 but would be reduced to 20 percent by 2020, a level regarded as "prudent" by international markets.
English also provided further details of the government's plans to raise NZ$5.0-7.0 billion through part-privatisation of state assets after it banked NZ$1.7 billion this month after selling 49 percent of Mighty River Power.
He confirmed another electricity company, Meridian Energy, will be next on the auction block in the second half of 2013. The government did not say how much it was expected to make from the partial float.