Queensland Treasurer Tim Nicholls says the State is on track to achieve a surplus by 2014-15, despite softening prices and falling demand for coal in Asia.
Mr Nicholls is releasing the mid-year budget review today.
He says the economic trouble in Europe and the United States will affect the budget's bottom line.
"We anticipate the State will have to take a fairly substantial hit in terms of its coal revenue," he said.
"The work that the Government has done in terms of stabilising the budget means we will still be able to achieve our fiscal surplus in 2014-15." He says the next 12 months will be tough, but that coal prices should recover.
"There will be a return to growth in the prices for coal in 2014 and 2015 and 2015-2016, and I think that is being reflected in some of the figures that are coming out of China," he said.
Mr Nicholls says tough measures by the Goverment have stopped Queensland heading toward a potential debt of $100 billion.
"We will now stabilise that debt at just under $82 billion and that will save many hundreds of millions of dollars," he said.
"We estimate almost a $500 million worth of interest will be saved over the next three years as a result of this action." But Mr Nicholls says he believes it will take until a second term in office for his Government to regain Queensland's AAA credit rating.