Federal deficit continues to shrink

Government aims to have it eliminated by the time fiscal 2015-16 rolls around

OTTAWA – The federal government’s budget deficit continued to shrink in December as revenues outpaced spending, keeping Ottawa on course for a smaller-than-expected shortfall for the year.

The deficit for the month was $353 million, down from $1.5 billion in December 2010, while the shortfall for the first nine months of fiscal 2011- ’12 fell to $17.69 billion from $27.37 billion in the same period a year earlier, the Finance Department said Friday.

With just three months left in fiscal 2011-’12, Ottawa should come in well under its full-year projection for a $31-billion deficit.

In December, revenues were up $1.4 billion, or 6.8 per cent, from a year earlier to $21.5 billion, the department said in its monthly Fiscal Monitor. Program expenses rose $500 billion, or 2.7 per cent, from a year earlier to $19.3 billion.

From April to December, revenues grew by $7.1 billion, or 4.2 per cent, from the same period last year to $174.2 billion, while program spending was down $3 billion, or 1.8 per cent, to 168.3 billion.

Finance Minister Jim Flaherty has pushed back the government’s timetable for eliminating the deficit by a year to 2015-’16, from the original goal of 2014-’15, due to weaker-than-expected-domestic economic growth and concerns over a possible global recession.

TD Economics has calculated the 2011-’12 deficit will come in at between $27 billion and $28 billion, at least $3 billion below the government’s forecast.

The Conservative government is expected to present next year’s budget in March.