Budget deficit smaller than thought by May

The federal budget deficit is nearly $3 billion smaller than predicted after 11 months, the government's latest monthly financial statement shows.

At the end of May the deficit stood at $31.5 billion compared to the $34.1 billion forecast, with the difference largely related to lower-than-expected cash payments.

The May budget forecast a $41.1 billion deficit for the full 2014/15 financial year.