WRAPUP 3-Canada vows balanced budget in 2015 without "slash and burn"

Thu Mar 21, 2013 6:08pm EDT
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* Deficit to be eliminated in 2015/16 as promised

* Revenue gap to be offset by cuts, bolstered tax-collection

* Spending measures include infrastructure, manufacturing tax credit

By Louise Egan

OTTAWA, March 21 (Reuters) - Canada's Conservative government pledged on Thursday to close tax loopholes and curb spending to erase its budget deficit in time for the 2015 election, even as it committed funds to infrastructure, manufacturing and job training.

The projected deficit in the fiscal year ending March 31 is roughly in line with Ottawa's previous forecast in November, at C$25.9 billion ($25.4 billion). The deficit would be about 1.4 percent of the size of the economy, compared with about 5.6 percent for the U.S. deficit.

But a big hit to revenues as the economy slows has forced Ottawa to project a bigger-than-expected shortfall in 2013/14, at C$18.7 billion, or about 1 percent of gross domestic product, compared with a previous estimate of C$16.5 billion. The deficit will shrink to a third of that the following year before returning to a surplus of C$800 million in 2015/16.

Finance Minister Jim Flaherty said he could have cut spending more drastically but opted for "moderate choices" so he could stimulate growth and jobs.   Continued...