Tasmania’s economic situation has darkened in the last year, with the latest reports saying it is leaking money at an increasing rate.

The state’s mid-year financial report indicates budgetary forecasts have dropped $450 million over the next four years of forward estimates, forcing the Government to scrap its plans for a surplus by 2016-17.

The forecast deficit has exploded to $376 million, $50 million more than the previous deficit.

Premier Lara Giddings says the Government could not have done much to improve the situation.

“Much of our additional spending has gone into creating jobs and stimulating the economy,” she said.

“Out of the $450 million deterioration that we've seen in the budget, 90 per cent of that has been totally out of the State Government's control.

“We do no control the national economy, we do not control Tony Abbott's politically-motivated decision to withdraw the carbon price.”

It is now anyone’s guess when the state may return to surplus.

With an election looming, the Liberal opposition says it can fix Tasmania’s dire position.

Shadow Treasurer Peter Gutwein says the party has identified $500 million in potential savings.

“Since Lara Giddings became Treasurer, she has delivered and is forecasting $1.4 billion in cumulative deficits... you simply can't trust Labor with money,” Mr Gutwein said.

“The Liberals are promising everything to everybody,” Premier Lara Giddings said.

“Tasmania just can't afford the $390 million they've already made, let alone those they will be making.

“Having done the hard yards [in 2010/11], we aren't going to blow the budget now,” she said.

The Tasmanian Chamber of Commerce's Michael Bailey said he hopes the poor outlook brings the best out of all contenders.

“So what we hope to see over the next few weeks leading into the election and both parties really clearly articulating their policies in a way that Tasmanians can then vote on what they see as being the best future,” Mr Bailey said.

“What I would expect to see are two very different approaches to what is a very difficult problem.”