This file photo dated May 14, 2020 shows people walking on a street in Wellington, New Zealand. (PHOTO / AFP)

WELLINGTON - The New Zealand government is requiring public agencies to find permanent savings including through cutting back on contractors, in the face of a deteriorating global economy and tax revenue failing to meet Treasury's forecasts.

Prime Minister Chris Hipkins told the press conference these measures are taken to "fight inflation and ensure the government's books return to surplus as soon as possible"

The government is also reducing future budget allowances, trimming back some programs, and taking back underspends, Finance Minister Grant Robertson said at a press conference on Monday.

READ MORE: New Zealand's population growth rebounds after pandemic

The savings and efficiency exercise will save taxpayers nearly 4 billion NZ dollars ($2.36 billion) over the forecast period, Robertson said.

The government's published accounts for the 11 months to the end of May showed that tax revenue was more than 2 billion NZ dollars ($1.18 billion) behind where the Treasury had forecast it to be at the Budget, the minister said, adding government spending was in line with forecasts during this period.

ALSO READ: New Zealand unveils 10-year transport plan

"We are directing public agencies to cut back on spending on consultants and contractors to pre-COVID levels," he said.

Prime Minister Chris Hipkins told the press conference these measures are taken to "fight inflation and ensure the government's books return to surplus as soon as possible."