Canada pledges again to balance budget by 2015

Fri Nov 16, 2012 3:57pm EST
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By Randall Palmer and Edward Krudy

OTTAWA/NEW YORK (Reuters) - The Canadian government on Friday reiterated its intention to balance its budget by 2015, three days after projecting there would be deficits until 2016-17.

In separate appearances in Quebec City and New York, Prime Minister Stephen Harper and Finance Minister Jim Flaherty were at pains to say they still intended to end the red ink by 2015.

"It remains the government's plan, intention, to balance the budget prior to the next federal election. The recent economic and fiscal update by the minister indicates we are actually very close to that objective," Harper told reporters in Quebec City. The next election is in October 2015.

Flaherty's fall fiscal update on Tuesday had pushed back the target date for eliminating the deficit by a year, to 2016-17, citing a weak global economy.

But the minister said in a speech in New York that the government was on track to balance the budget in the next two to three years, barring major external events, and he later clarified that he intended a balanced budget by 2015.

"The prime minister's always correct," he chuckled.

He sought to explain the discrepancy by saying the fiscal update had built in a C$3 billion ($3 billion) contingency cushion, meaning there was an underlying surplus of C$1.2 billion for 2015-16. He said the projection of a C$1.8 billion deficit amounted to about half a percent of the C$275 billion federal budget.

"There's lots of water to go under the bridge between now and then," he said.   Continued...