The annual budget showed a deficit of NZ$684 million ($500 million) for 2014-15, more than a billion dollars off the NZ$372 million surplus English predicted last year.
Blaming a fall in dairy prices for the budget miss, English said he now expected to end a seven-year run of deficits slightly later than originally expected, forecasting a razor-thin surplus of NZ$176 million in 2015-16.
He said the surplus would then surge to NZ$3.6 billion by 2018-19 "subject to the usual economic variabilities".
English added that the government was on track to reduce debt, while also assisting society's most vulnerable, including a new NZ$790 million package for needy families.
"We're making good progress on the government's fiscal priorities and the outlook is positive," he said.
Prime Minister John Key's conservative government first promised to deliver a 2014-15 surplus four years ago, making it a cornerstone economic policy in campaigning for general elections in 2011 and 2014.
Updated Treasury forecasts indicated just a few months after last year's budget that a surplus was unlikely, although Key maintained until this month that the goal was "challenging" but still possible.
English said that even though the long-awaited surplus was yet to be realised, striving for it had forced the government to impose fiscal discipline, reducing debt and reining in expenditure.
"The overall fiscal trajectory has not changed," he said.
"The surplus target has helped turn around the government's books. We've come from an NZ$18.4 billion deficit four years ago to seeing steadily rising surpluses into the future."
He said New Zealand's farm-reliant economy, which generates an annual gross domestic product of about NZ$230 billion, was among the strongest in the developed world.
- 'Big picture' impressive -
Budget papers forecast economic growth averaging a touch more than 2.8 percent in the next four years, with subdued inflation averaging less than 2.0 percent.
English said the government was still on target to meet its long-term goal of reducing net debt to below 20 percent of gross domestic product by 2020.
He flagged possible tax cuts in 2017, an election year, if economic conditions allowed.
Opposition Labour Party finance spokesman Grant Robertson scoffed at English's prediction of a narrow surplus next year, saying the National Party-led government had already shown it could not be trusted to meet its economic goals.
"Not reaching surplus at the peak of the economic cycle is a huge failure and makes a mockery of National’s claims to be good economic managers," he said.
But ratings agencies Standard & Poor's and Moody's both shrugged off the missed surplus, saying the budget would not affect New Zealand's credit rating.
S&P declared budget projections "broadly in line with our expectations", while Moody's said they showed "a continuing positive trend in the government's finances, reflecting the relatively good underlying economic fundamentals".
TD Securities strategist Annette Beacher said the budget "hit the right notes" for the market, contrasting the figures with last week's Australian budget, where the deficit is expected to hit US$28 billion in 2015-16.
"The 'big picture' remains impressive, with improving debt and deficit metrics, especially compared with Australia," she said.