DAVOS, Switzerland (Reuters) - Canada’s federal government must be very tough on spending or it won’t be able to balance the budget as promised, Finance Minister Jim Flaherty said in an interview.
Even faced with weaker-than-expected growth, which could dent revenues, Flaherty upheld Ottawa’s pledge to return to fiscal balance by 2015.
“On the spending side we’re being really tough and I‘m being really tough and we need to be really tough or I won’t be able to balance the budget, which we’re going to do by 2015,” he told Reuters at the World Economic Forum meeting in Davos, Switzerland.
Flaherty is expected to present his next budget in March.
Figures for the first eight months of the fiscal year showed the deficit narrowing gradually, and Ottawa expects a relatively small deficit in the 2012-13 fiscal year of C$25 billion ($24.79 billion).
The lowest inflation rate in three years in Canada also makes the job of balancing the budget more difficult.
The level of nominal gross domestic product, which is GDP plus inflation, directly affects tax revenues and muted inflation means the revenues will be lower than they would be otherwise.
Reporting by Ben Hirschler; Writing by Louise Egan; Editing by Jeffrey Benkoe