December 21, 2012 / 4:08 PM / in 5 years

Canada's seven-month budget gap narrows to C$10.6 billion

OTTAWA (Reuters) - Canada’s federal budget deficit narrowed in the first seven months of the fiscal year to C$10.57 billion ($10.68 billion) from C$13.90 billion in the same period last year as personal and corporate income tax revenues rose and debt charges were lower.

Canadian pennies are seen at The Royal Canadian Mint in Winnipeg, May 4, 2012. REUTERS/Fred Greenslade

The monthly shortfall in October was C$1.68 billion, compared with a gap of C$2.13 billion a year earlier, the Department of Finance said in a report on Friday.

The Conservative government in October pushed back by one year, to 2016-17, the date it expects to eliminate the deficit. Most economists believe that if the economy continues to grow, the books could be balanced sooner.

Ottawa has estimated a 2012-13 deficit of C$26 billion, including a C$1 billion cushion for risk.

In the April-October period, revenues increased by 3.6 percent, or C$4.9 billion, from the same period in 2011, pushed up by personal income tax and corporate income tax. Program expenses rose by 2 percent, or C$2.7 billion, on increases in elderly benefits and direct program expenses.

Public debt charges decreased 6.1 percent, or C$1.1 billion, on a lower effective interest rate.

Reporting by Louise Egan; Editing by Peter Galloway

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