Flaherty says budget to look at restoring balance

Tue Dec 22, 2009 5:34pm EST
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By Randall Palmer

OTTAWA (Reuters) - The Canadian government intends to maintain its economic stimulus into 2011, but its next budget will look at how to return to fiscal balance, Finance Minister Jim Flaherty told Reuters in an interview.

"I expect we'll set out some indicators about how we'll move the country back toward balanced budgets over the course of several years," he said on Monday in a year-end interview that was held for release on Tuesday.

Alone among the Group of Seven leading industrialized nations, Canada ran surpluses for more than a decade, but moved into deficit in the last fiscal year amid a stimulus program designed to pull the economy out of recession.

Flaherty said the deficit for the year that ends March 31 remains on track to be near the C$55.9 billion ($52.7 billion) previously forecast, with growth around 2.3 percent for 2010.

In November he projected a small deficit of C$5.2 billion in 2014-15, but he told Reuters that it was reasonable to expect a balanced budget by then.

He said the next budget would be unlikely to come before the Vancouver Olympics, which end on February 28, suggesting a March announcement about government spending plans.

"It'll primarily be a stay-the-course budget. I think that's what the country needs right now and what the country expects," he said.

Flaherty said Canada's economic prospects for next year are relatively good, reflecting encouraging retail sales and business confidence, rebounding auto sales that have let General Motors Co start repaying its government bailout, and unemployment that is starting to stabilize.   Continued...

<p>Canada's Finance Minister Jim Flaherty speaks during an interview with Reuters in Ottawa December 21, 2009. REUTERS/Chris Wattie</p>