Josh Frydenberg is expected to unveil a deficit of well over $200 billion and although he says that's eye-watering, hardly anyone will bat an eyelid.
The treasurer will on Thursday give an update on the state of the economy along with forecasts of growth and employment as the nation eases past the coronavirus pandemic and recession.
The full budget has been pushed back to October 6.
Economists from NAB and Westpac are tipping the deficit for 2020/21 will be $230-240 billion.
It's expected to be up to $150 billion the following year.
"It's pretty large but it reflects a pretty massive fiscal stimulus package that's been in place due to the pandemic," NAB economist Kaixin Owyong told AAP.
Mr Frydenberg said that was the harsh reality of the coronavirus.
"You're going to see eye-watering numbers around debt and deficit, numbers that Australians have never seen before," he told Nine's Today show.
Treasury's economic forecasts are expected to be upgraded from earlier gloomy scenarios.
NAB is now forecasting unemployment will peak at about eight per cent this year, rather than the 11 or 12 per cent previously expected.
Treasury officials outlined the same expectation in the review of JobKeeper that was finished in late June and released on Tuesday.
"The outlook further out is pretty uncertain given in the next six months we don't know what's coming along," Ms Owyong said.
"It's quite possible things will change quite a bit (before the October budget)."
Labor's shadow treasurer Jim Chalmers wants to see four years of figures in the update.
"We need to know how bad the government expects this recession to get, how high unemployment will be for how long and how much extra debt has piled up," he told reporters in Canberra.
The government has been at pains to explain Thursday's event is not a mini-budget.
"No one should expect any new announcements tomorrow," Prime Minister Scott Morrison warned.
"Tomorrow is about just reconciling the books for last year and this year in terms of all the commitments that have been made."
Grattan Institute head Danielle Wood said that would be a missed opportunity.
The announcement on Tuesday that the JobKeeper wage subsidy and increased JobSeeker unemployment payment would be extended and tapered showed the government was thinking about the next phase of economic recovery, but that had to come with a plan to get things moving again and create jobs.
"Really, the next phase is how do we start growing again and that is only going to happen if the government's willing to substantially boost spending," Ms Wood told AAP.
"This is orthodox economic thinking at this point in the cycle, that it's not the time to worry about debt and the priority is boosting growth and boosting jobs."
Australian Associated Press
