The Northern Territory's economic recovery is happening quicker than expected following a massive increase in national GST revenue forecasts.
But the Top End remains deep in the red and is likely to slip even further into debt over the next three years.
The 2021/22 budget released on Tuesday revealed a $1.35 billion deficit and net debt of $9 billion, the equivalent to 122 per cent of revenue.
That is expected to climb to $11.4 billion, or 166 per cent of revenue, by 2024/25 but the deficit is set to fall to $629 million.
Overall, it is a $1 billion improvement on last year's forecast for 2021/22, which predicted the deficit to be $1.7 billion, with net debt of $10.1 billion.
The NT's bigger-than-expected cut of the GST is behind the improved outlook, following Australia's speedy economic recovery from the coronavirus crisis.
It is likely to see the NT given $2.9 billion in 2020/21 and $3.16 billion in 2021/22, an increase on projections of $379 million and $359 million respectively.
Chief Minister Michael Gunner says the government's strategy remains the same as last year when the COVID-19 crisis lashed the NT's already debt-laden economy.
"Control the virus, grow the economy and repair the budget," he said.
"This is a very big step along the way to our rebound."
The Gunner Labor government was returned for a second term in August, promising to "save lives and save jobs" during an election largely fought on COVID-19 and border control issues.
The unemployment rate rose to 5.7 per cent in March, up from 4.8 per cent six months earlier, but Mr Gunner said the budget shows the economy is recovering quicker than expected.
"All the stats are quite incredible when you look at growth, which is a tribute to the resilience of this place and the confidence people have," he said.
Growth is forecast to be 4.7 per cent this year and 2.3 per cent in 2021/22, up from last budget's prediction of -0.1 per cent growth.
Measures to continue growing the economy include $60 million to boost local jobs and businesses, with a further $60m promised the following year.
A further $26.3m was allotted to support the tourism sector, with $7.8m to fund resource exploration and $400m for Territory-funded capital projects.
The share of the budget allocated to the Territory's COVID-19 health response and vaccine rollout dropped from $25m in 2020/21 to $15m, with $3.5m for the largely federally funded Howard Springs quarantine facility.
The government has also responded to ongoing community concerns about crime with $23m for police recruitment, increasing CCTV and improving emergency services.
The NT's large public sector is likely to continue to hobble its finances into the future despite a continued wage freeze and negotiations with its union.
But Mr Gunner hopes a new cap on wages will mitigate the problem, saying government departments will be restrained from exceeding their salary budgets.
Reforms to how the NT manages its finances also included a legislated debt ceiling of $15 billion.
They are expected to save the Top End $424m over the next four years.
NT BUDGET 2021/22
Deficit: $1.35 billion
Revenue: $7.4 billion
Expenditure: $7.94 billion
Net debt: $9 billion
GST revenue: $3.16 billion
Unemployment: 5.4 per cent
Growth: 2.3 per cent
