OTTAWA (Reuters) - Canada’s Conservative government will present its annual federal budget on March 21, and still expects to return to surplus by 2015 despite a weaker economic outlook, Finance Minister Jim Flaherty said on Thursday.
“The economists...were a little more pessimistic for this year and a little bit more for next year,” Flaherty said of private sector forecasts he received last week. “But it’s an interim concern, it’s not a long-term concern in terms of real GDP growth.”
Speaking to reporters in Ottawa, he added: “As you know, our target is to balance the budget in 2015. We remain on target.”
Private sector economists last week cut their economic forecasts for 2013 due to the uncertain global environment. The government gave no actual figures.
Canada lurched into a budget deficit during the global financial crisis after 11 straight years of surplus. The federal government budget shortfall, at about 1.5 percent of the value of the overall economy, is tiny compared with that of the United States or the UK and barely registers on the radar of financial markets, which are more concerned about provincial government debt.
Some experts complain that Europe’s experience with austerity shows that a single-minded focus by Ottawa on eliminating the deficit at a time of slow growth could hamper the economy further.
Federal government revenues have also taken a big hit because of the discount on prices for Western Canadian crude oil compared to imported oil.
In November, Ottawa forecast a C$26 billion ($25.5 billion) deficit for the fiscal year to March 31, about 1.5 percent the size of the overall economy. Some economists believe the gap will be smaller.
The government expected to trim the deficit gradually, and forecast a C$1.7 billion surplus in 2016-17. Excluding a C$3 billion cushion to safeguard against another shock, the budget shows a balance a year earlier.
The budget is usually presented at 4 p.m. (2000 GMT) in Parliament.
($1 = $1.02 Canadian)
Reporting by Louise Egan; Writing by Randall Palmer; Editing by Jeffrey Hodgson and Leslie Adler