The budget deficit is at its lowest in two years

Treasurer Scott Morrison. Stefan Postles/Getty Images

The underlying budget deficit has dropped to $36.1 billion, its lowest in almost two years, according to Department of Finance numbers.

The figures for February put the Federal Budget on track to meet forecasts, according to analysis by CommSec.

They are a result of lower spending more than making up a shortfall in revenue.

Total revenue was $1.22 billion weaker than the mid-year forecast mainly because tax collection didn’t meet expectations.

But expenses were also less than budget, about $2.81 billion lower, mainly due to smaller spending on wages and salaries and grants.

The latest deficit of $36.1 billion is about 2.2% of GDP. In January it was $44.4 billion.

Treasurer Scott Morrison is due to deliver his first federal budget in four weeks.

The Department of Finance says the underlying deficit for February was $743 million lower than forecast and ‚Äúprimarily relates to lower than expected cash payments and net future fund earnings, partially offset by lower than expected cash receipts”.

While the numbers can bounce from month to month, they suggest that the Federal Budget is on track to meet government forecasts, according to CommSec analysis.

“Spending restraint including low public service wage growth (similar trend in private sector) is driving the improvement,” CommSec says.

The government expects an underlying deficit of $37.4 billion for the current financial year.

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.