TREASURY is reportedly urging the Gillard government to drop its promise to deliver a budget surplus by next year.
The Australian Financial Review says it is undestands Treasury will not advise the government to stick with the surplus amid indications of a slowdown.
Treasury is concerned about the impact of falling nominal growth on the budget bottom line, and on economic activity, the AFR says.
The opposition has recently accused the government of moving away from its commitment to return the budget to surplus in 2012/13.
The mid-year outlook, released in October, predicted a $1.1 billion surplus in 2012/13.
The government has recently ordered bureaucrats to find savings.