UPDATE 2-Canada deficit projection too big by billions -watchdog

Thu Nov 29, 2012 4:45pm 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

* Government says budget officer pulling numbers "out of the air"

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, a finding the finance ministry disputed.

A report by the parliamentary budget officer (PBO) on Thursday assessed Finance Minister Jim Flaherty's revised budget outlook on Nov. 13, which projected 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.

Flaherty said then 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 difference is due to a C$3 billion cushion in its latest forecasts that won't be used if the economy performs well.   Continued...