Canada's New Democrats seek new budget outlook due to low growth

Mon Jul 20, 2015 2:47pm EDT
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By Randall Palmer

OTTAWA, July 20 (Reuters) - Canada's opposition New Democratic Party (NDP) asked the country's Parliamentary Budget Officer on Monday to update federal budget figures in light of a sharply weaker economic forecast from the Bank of Canada.

Canada's Conservative government, which is facing an election in October, has pledged to balance the books this year for the first time in almost a decade. But the economy's struggles since last year's plunge in prices for oil, a major Canadian export, have raised doubts about whether this can be achieved.

The Parliamentary Budget Officer, Jean-Denis Frechette, has a mandate to provide independent analysis to the country's lawmakers.

"The downgrade in the Canadian economic forecast is likely to have a significant impact on the fiscal projections included in budget 2015," NDP Member of Parliament Nathan Cullen, the left-leaning party's spokesman on finance, wrote Frechette.

The NDP have pulled ahead of the Conservatives in recent opinion polls, with the economy seen as a factor.

The government's budget in April forecast a narrow surplus of C$1.4 billion ($1.1 billion) in the fiscal year that started on April 1, but that was predicated on economic growth of 2.0 percent in 2015.

At the time, the Bank of Canada projected a similar growth level, 1.9 percent, for 2015. But the central bank downgraded that to 1.1 percent on Wednesday and said the economy likely shrank in the first two quarters.

The bank's lower forecast has prompted talk in Ottawa that instead of a 2015-16 surplus, which would have been the first in eight years, there may now be a narrow deficit.   Continued...