OTTAWA (Reuters) - The Canadian government reported on Friday a preliminary budget deficit of C$2.25 billion ($2.05 billion) for 2008-09, twice the amount it had forecast earlier this year as the recession caused tax revenues to dwindle.
The deficit, which is subject to revisions in coming months, follows 11 straight years of surplus. It comes after Finance Minister Jim Flaherty sparked a political uproar by raising his estimate of the current fiscal year’s deficit to a historic high of more than C$50 billion.
In his January budget, Flaherty had said the 2008-09 deficit would be C$1.1 billion.
In March, the final month of the fiscal year, Ottawa posted a deficit of C$3.57 billion, compared with a shortfall of C$1.20 billion in the same month of 2008.
The biggest hit to revenues in the 2008-09 fiscal year came from corporate taxes, which slid sharply to result in a 3.8 percent drop in overall revenues. Expenses rose 3.5 percent.
In the month of March, revenues took an even bigger hit, falling 14.4 percent, while expenses fell 2.8 percent.
The government had a financial requirement of C$89.5 billion in the 2008-09 fiscal year due to the government’s extraordinary measures to fix impaired credit markets.
Reporting by Louise Egan; editing by Peter Galloway