Ottawa sees C$64 billion in deficits over two years

Thu Jan 22, 2009 4:59pm EST
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By Randall Palmer

OTTAWA (Reuters) - Canada will post C$64 billion in deficits over the next two fiscal years to stimulate a flagging economy but it will return to surplus in five years, a senior government official said on Thursday.

The deficits will mark an end to more than a decade of surpluses for Canada, which had been the only member of the Group of Seven leading industrialized nations still in the black.

The official, an aide to Prime Minster Stephen Harper, said the deficit would be C$34 billion in the fiscal year starting April 1 and C$30 billion the following year, and deficits would dwindle thereafter.

"The world economy has been thrown into a crisis that we can address but whose effects we cannot escape," said the aide, briefing reporters ahead of the minority Conservative government's annual budget, which it will deliver on Tuesday.

"We did not start the economic crisis but we will take steps to protect the jobs of today while running our economy to create the jobs of tomorrow."

The last time Canada ran a deficit was in 1996-97. Next year's will be the largest figure since the C$37.5 billion shortfall in 1994-95.

Most of the stimulus spending will be short-term so as to prevent a permanent deficit from emerging, he said.

In the campaign ahead of the October 14 election, Harper had said a deficit could be avoided, but as the global economy worsened he agreed at a summit in Washington the next month to join in concerted international stimulus efforts.   Continued...

<p>The Parliament Building is framed through a gate on Parliament Hill in Ottawa, November 13, 2003. REUTERS/Chris Wattie</p>