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TORONTO (Reuters) - Ontario's minority Liberal government said on Monday it is reducing its budget deficit faster than projected, crediting higher-than-expected growth and tax revenues, Although it has not changed its 2017-18 target for balancing the budget.
In its autumn economic statement, the government of Canada's most populous province said its 2012-13 deficit projection fell to C$14.4 billion ($14.69 billion) from C$14.8 billion in April. The 2013-14 and 2014-15 deficit targets remained at C$12.8 billion and C$10.1 billion, respectively.
Finance Minister Dwight Duncan increased his economic growth projections for this year, forecasting real domestic product would rise 2.0 percent in 2012 from the 1.7 percent seen in the March budget.
But he trimmed his outlook for next year. Growth in 2013 is targeted to come in at 1.9 percent, down from the 2.2 percent seen in the spring.
The government expects healthy business capital investment, a rebound in net trade and ramped up consumer spending will be key contributors to growth.
The government said the updated fiscal plan includes no new funding for public sector pay increases despite current legal challenges from groups such as teachers and doctors.
In its 2012-13 budget this spring, the government vowed to rein in public sector labor costs, halt corporate tax cuts and introduce a new tax on the wealthiest earners.
The province - which accounts for about 40 percent of the country's economy - has been battling big budget deficits and slow growth projections since its record shortfall of nearly C$25 billion announced in 2009 during the global recession.
Ontario's deficit spiked in the wake of the financial crisis as its manufacturing sector, which includes much of Canada's auto industry, shed jobs. A strong Canadian dollar has also pressured exporters.
The province's rising debt load has drawn the scrutiny of ratings agencies. Moody's downgraded Ontario's debt rating in April.
In its fiscal update, the government said total expenses were down slightly, partly reflecting prudent program spending and lower-than-forecast interest on debt.
If the 2012-13 reserve fund of C$1.0 billion is not needed by the end of the year, the Liberals said it will go towards further deficit reduction.