May 25, 2012 / 3:11 PM / in 5 years

Canada deficit below target despite one-off costs

OTTAWA (Reuters) - Canada’s preliminary budget deficit for 2011-12 came in below forecasts despite big spending in the final month of the fiscal year to compensate the province of Quebec and pay for buy outs for thousands of public service workers.

The Department of Finance reported on Friday the federal deficit was C$23.5 billion ($22.8 billion) for the year ending March 31, below the government’s forecast of a C$24.9 billion shortfall.

It said the results to date are in line with its projection. The final results, which will not be available for several months, will reflect various end-of-year adjustments for which information is not yet available.

In March, the deficit totaled C$9.0 billion, up from C$6.2 billion in the same month last year.

Expenses grew faster than revenues in the month, up 16.3 percent from a year earlier to C$30.8 billion compared to revenue growth of 6.8 percent to C$24.4 billion.

Ottawa transferred C$2.2 billion in federal assistance to the province of Quebec in March to compensate it for harmonizing its provincial sales tax with the federal goods and service tax.

It also recorded a $1.8 billion liability for estimated layoffs in the federal bureaucracy.

In the March 29 budget, the Conservative government unveiled plans to cut spending by 6.9 percent by 2015 in order to balance its budget in the medium term.

That means an estimated 19,200 government jobs will be lost, of which 7,000 will be through attrition, the government has forecast.

Editing by Jeffrey Hodgson

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