Budget deficit to linger after recovery
By Allan Dowd
VICTORIA, British Columbia (Reuters) - The Canadian government pushed back its projected return to balanced budgets by at least two years on Thursday and pledged to stay the course in delivering economic stimulus and not raising taxes.
Amid heated speculation about an early election, the minority Conservative government released its fiscal update weeks earlier than usual in a bid to show it is serious about eventually eliminating the budget shortfall.
"One of the purposes of this was to show our way back to surpluses," Finance Minister Jim Flaherty told Reuters following the surprise budget announcement at a business luncheon in Victoria.
Flaherty said the sharper-than-expected global recession would cause higher deficits for longer. The total shortfall for this year and the next five years will be C$164.4 billion ($152.2 billion), he said.
Previously, Flaherty said there would be a small surplus by 2013-14, but his latest projection shows a deficit of C$5.2 billion in 2014-15.
That would mean fiscal 2015-16 would be the earliest date for a return to balance, based on forecasts made in August. In a speech, Flaherty later said he hoped to "eliminate that last, small deficit five years from now."
"It's not obviously good news, but with a potential election looming I guess it's probably good politics more than anything else," said Steve Butler, director of foreign exchange trading at Scotia Capital.
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