CALGARY (Reuters) - The Canadian government will unveil its budget this year later than it usually does, waiting at least until April because of market volatility, Finance Minister Joe Oliver said on Thursday.
“Given the current market instability, I will not bring forward our budget earlier than April. We need all the information we can obtain before finalizing our decisions,” Oliver said in the text of a speech he was giving in Calgary.
The federal budget is usually introduced in February or March, occasionally as early as January, given the fiscal year starts on April 1. But lower oil prices have made it tricky to predict government revenues and what the economy will do.
Oil prices have more than halved from their peak last June, hit by rising production and weaker-than-expected demand in Europe and Asia.
“Given the current volatility, there is no consensus about how low will prices fall and how long will they stay there,” Oliver said. “Nevertheless, every knowledgeable person I have spoken to believes, and history tells us, that prices will eventually move well above current level.”
He said lower oil prices create both benefits and difficulties for the Canadian economy. Among the benefits are enhanced consumption and savings.
“Also, energy costs for manufacturing and transportation companies decline, along with the Canadian dollar, which makes these and other sectors more competitive,” he said.
On the other hand oil company profits fall, their capital investment slows and employment declines, and federal and provincial tax revenues suffer, he noted.
Oliver told reporters that over the intermediate term, lower oil prices would have a broadly neutral impact on real, or inflation-adjusted, gross domestic product, but have a negative effect on nominal GDP, which influences tax revenues.
The Conservatives ran up a large budget deficit in the aftermath of the 2008-09 financial crisis and Oliver reiterated that they would get back to balance in 2015.
Oliver, who held the natural resources portfolio before he took over at Finance last year, said it was “a matter of urgent national interest” that Canada diversify its energy markets in a way that relies less on the United States, because of the shale boom which will reduce U.S. demand for Canadian oil.
Additional reporting by Leah Schnurr and David Ljunggren in Ottawa; Writing by Randall Palmer; Editing by Peter Galloway and Meredith Mazzilli