The treasurer will hand down his fourth budget on Tuesday night, days out from the start of an election campaign.
"What we'll see tonight is a material improvement to the budget bottom line," he told reporters heading into Parliament House.
"We are banking the dividend of a stronger economy."
Economists are expecting an underlying budget deficit of between $80 billion and $70 billion for the 2021/22 financial year compared with the $99.2 billion shortfall predicted in the December mid-year review and the $106.6 billion at the time of last year's May budget.
The unemployment rate is also predicted to be 3.75 per cent in the September quarter of this year, which would be the lowest level since August 1974 and in line with the forecast of the Reserve Bank of Australia.
In the mid-year review the jobless rate was forecast at 4.25 per cent for the 2022/23 financial year. The rate hit a 14-year low of four per cent in February.
"We have avoided the scarring of the labour market that is so reminiscent of previous recessions of Australia in the 80s and 90s," Mr Frydenberg said.
The budget will include tens of billions of dollars in spending commitments covering infrastructure, health, skills and national security.
The government has also promised a support package for households facing cost of living pressures, particularly from a spike in petrol prices to above $2 a litre.
There is speculation it will include a temporary cut in the 44.2 cents per litre fuel excise.
Still, there was already some promising signs for motorists with a stabilisation in petrol prices in the past week after touching record highs the previous week.
The Australian Institute for Petroleum said the national petrol price average fell 5.8 cents last week to 206.7 cents per litre.
Rising cost of living pressures and unsettled consumer confidence may be taking the gloss off retail spending after being a key plank in Australia's economic recovery from the Delta COVID-19 variant late last year.
Shortly before the budget is released, the Australian Bureau of Statistics will release retail trade figures for February, with the consensus among economists pointing to a 0.9 per cent increase after the 1.8 per cent rise in January.
Confidence has declined further in recent weeks due to the floods along the Australian east coast and escalating concerns over inflation.
The weekly ANZ-Roy Morgan consumer survey is also released on Tuesday.
Last week confidence fell to its lowest level since September 2020, while consumer inflation expectations jumped to an 11-year high of six per cent.
Annual inflation was running at 3.5 per cent as of December.
