Canada budget deficit shrinks again in August after July blip

Fri Oct 25, 2013 11:03am EDT
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OTTAWA (Reuters) - Canada's federal budget deficit narrowed in August from the same month last year, resulting in a shortfall of C$6.84 billion ($6.55 billion) in the first five months of the fiscal year, compared with a C$7.20 billion deficit a year earlier, the Finance Department said on Friday.

The deficit in August shrank to C$2.30 billion from C$3.04 billion in August 2012 as program expenses fell 3.8 percent and revenues edged 0.6 percent higher year over year.

"The government remains on track to balance the budget in 2015," the finance ministry said in a news release accompanying the monthly fiscal monitor report.

Canada ran 11 straight years of budget surpluses before the 2008-09 financial crisis, and the Conservative government has vowed to balance the books again by 2015, an election year.

Final figures for the 2012-13 fiscal year released on Tuesday showed a deficit of C$18.9 billion, compared with the government's estimate earlier this year of a C$25.9 billion gap.

The deficit had widened unexpectedly in July on a sharp 73.7 percent drop in corporate income tax revenue, which the government said was due to the timing of tax assessments and which it said would unwind in August. Revenues from corporate income taxes rose 13.8 percent in August.

The government's latest estimate is for a deficit of C$18.7 billion in 2013-14, but Finance Minister Jim Flaherty said this week he would update the fiscal outlook within a month.

(Editing by Peter Galloway) nO8N0DX02M