March 28, 2014 / 3:04 PM / 5 years ago

Canada budget deficit narrows in first 10 months of year

OTTAWA (Reuters) - Canada’s federal government ran a $2.16 billion ($1.96 billion) surplus in January of this year compared with a C$480 million surplus in January 2013, the Department of Finance said in a monthly report on Friday.

The deficit in the first 10 months of the fiscal year from April 2013 to January 2014 totaled C$10.54 billion, down from C$13.87 billion in the same period a year earlier.

In the federal budget presented in February, the Conservative government estimated a deficit of C$16.6 billion in the current fiscal year ending March 31. That figure includes a C$3 billion contingency fund to safeguard against unexpected shocks. Ottawa expects to return to a surplus in 2015.

In the month of January, the surplus was the result of a 5.1 percent increase in revenues year-on-year due to increases in most revenue streams and a 2.6 percent drop in program expenses.

In the 10-month period, revenues grew by 4.2 percent. The biggest gain in dollar terms was from personal income tax revenues, which grew by C$3.3 billion, or 3.2 percent. Most other revenue streams also increased, except for corporate income tax revenues, which fell by C$0.6 billion or 2.2 percent.

Program expenses in the same period grew 2.9 percent. Overall benefit payments to individuals grew although employment insurance benefits fell slightly. Transfers to other levels of government also increased, as did direct program expenses.

($1 = $1.10 Canadian)

Reporting by Louise Egan; Editing by James Dalgleish

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