Canada budget tackles deficit, averts election

Thu Mar 4, 2010 6:07pm EST
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By Louise Egan

OTTAWA (Reuters) - Canada's minority Conservative government outlined plans to rein in a record-large deficit on Thursday, presenting a budget that lets it keep its grip on power for now.

Michael Ignatieff, leader of the main opposition Liberals, said Liberals would vote against the budget, but not in large enough numbers to bring the government down.

Ignatieff, who dismissed the budget as nothing more than "cuts, freezes and gimmicks," can instruct Liberal lawmakers to be absent or abstain from key confidence votes in Parliament.

The stay-the-course plan contained few surprises for markets, although the Canadian dollar edged a little lower.

The government said the deficit in the year to March 31 will be slightly smaller than expected at C$53.8 billion ($52.2 billion), after a previous forecast a gap of C$55.9 billion.

That is partly because a two-year, C$47.2 billion economic stimulus package was slow to get started, so more spending will be pushed into 2010-11.

The government now forecasts a 2010-11 deficit of C$49.2 billion, up from C$45.3 billion predicted earlier. It expects that to narrow to C$1.8 billion by 2014-15 as the government cuts spending.

"This is a tough budget," Finance Minister Jim Flaherty told a news conference.   Continued...

<p>Canada's Finance Minister Jim Flaherty (L) delivers his budget as Prime Minister Stephen Harper (R) listens in the House of Commons on Parliament Hill in Ottawa March 4, 2010. REUTERS/Chris Wattie</p>