Canada budget watchdog says bigger deficit numbers inexplicable

Thu Nov 29, 2012 12:45pm EST
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* Budget officer says deficits appear overstated

* Sees less impact on revenue, expenses from new growth forecasts

* Urges more transparency from Ottawa on budget assumptions

By Louise Egan

OTTAWA, Nov 29 (Reuters) - Canada's budget watchdog said the Conservative government appears to have overstated its budget deficit by an average of C$4.7 billion ($4.74 billion) a year for the current and next three fiscal years.

Finance Minister Jim Flaherty revised the budget outlook on Nov. 13, projecting federal budget deficits for this year and the following three years that were on average C$5.8 billion bigger than the government estimated in its March budget. He also said the federal government would wipe out a small deficit in 2016-17, a year later than previously forecast.

But both Flaherty and Prime Minister Stephen Harper have since contradicted their own report, pledging to balance the books before the next election in 2015.

The finance minister has said the different is due to a C$3 billion cushion in its latest forecasts that won't be used if the economy performs well.

In a report assessing Ottawa's revisions, the parliamentary budget officer (PBO) said on Thursday the picture painted by the government is more pessimistic than is warranted.   Continued...