Ontario on track to balance budget by 2017-18

Fri Nov 19, 2010 7:24am EST
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By Claire Sibonney

TORONTO (Reuters) - Ontario is on track to balance its budget in eight years as its export-oriented economy recovers from a deep recession and record-high deficits, despite persistent economic headwinds and new spending on energy tax relief.

The province's Liberal government said in its fall economic update that its deficit targets for fiscal 2011-12 and 2012-13 were unchanged from the March budget. It had said on Tuesday that its 2010-11 deficit would come in C$1 billion ($980 million) lower than forecast, at C$18.7 billion.

Canada's manufacturing hub and most populous province raised its growth forecast for 2010 to 3.2 percent from 2.7 percent in the March budget. But it cut its 2011 growth forecast to 2.2 percent from its earlier 3.2 percent projection, and estimates for 2012 and 2013 were also revised lower.

"The plan we've laid out sees us staying on track but we are exceeding targets up until now," Finance Minister Dwight Duncan told reporters.

But Duncan said it was premature to assume the province could balance its books sooner than forecast for 2017-18 because of the slowing growth, due mainly to a still struggling economy in the United States, Canada's largest trading partner by far.

"The U.S. economy has to be top. It is not performing as well as their analysts thought it would perform. We take that into account obviously in our projections, just given how closely tied to the U.S. economy Ontario is, and I think that's a real concern."

The budget update on Thursday included a renewal of a deal with land registry operator Teranet and its owner Borealis Infrastructure, which will generate a C$1 billion upfront payment to the province.

Ontario said it will use the funds to reduce its 2010-11 borrowing requirement.   Continued...