The provincial debt in New Brunswick increased by $438.6 million in the 2008-09 fiscal year, more than three times the amount projected in the Liberal government's budget.

The net debt is now $7.4 billion, according to audited financial statements released Monday.

The statements show the increase in net debt is attributed to three main areas: the deficit, capital spending on highways, schools and hospitals, and an adjustment for NB Power Group due to declines in market values.

The Department of Finance said even though a number of departments spent less than they planned and pension expenses were lower than expected, the province recorded a deficit of $192.3 million.

In a statement, the department blamed the global economic downturn as the primary cause of the change from the original budgeted surplus of $19 million.

"During the next few years, there are some very important and tough decisions that will need to be made by our government as we recover from the global economic slowdown," said Finance Minister Greg Byrne.

"We look forward to discussing those issues with the public in pre-budget consultations early in October."

On the revenue side, the government collected less than it expected in mining and corporate income taxes, but more than projected in harmonized sales tax and personal income tax.