The province's Finance Department released audited financial statements for 2011-2012 showing a $260.6 million deficit — $188.2 million less than what it reported in the spring budget.
But its net debt increased by $430.1 million to $10 billion.
"Although we have managed to slow the growth of the debt, it remains a lasting reminder of the need for government spending that is sustainable relative to our revenue," Finance Minister Blaine Higgs said in a statement.
Higgs said spending was down by $128.8 million, marking the first time in the last 11 years that expenses decreased from the year before.
"By initiating the government renewal process and coming in under budget in 2011-12, we are demonstrating our commitment to rebuilding our province's finances," he said.
Departments including health, education and economic development spent less than their budget targets. But Higgs said that was partially offset by additional costs coming from pensions and the province's response to flooding that happened in March.