TORONTO (Reuters) - Ontario’s 2009-10 budget deficit came in below forecast, but a struggling U.S. economy may hurt future growth, the provincial government said on Monday.
The deficit for Canada’s most populous province -- hardest hit by the global economic downturn -- was C$19.3 billion ($18.4 billion) in the year to March 31, or C$2 billion lower than the March forecast, and C$5.4 billion below a projection from fall 2009.
Expenses were C$115.1 billion, C$2.6 billion lower than estimated, as the government’s stake in the auto sector gained in value and on lower interest rates on debt.
But revenues were C$95.8 billion, or C$6.7 billion below forecast, on the deeper than expected recession.
“What we have attempted to do is manage prudently,” Ontario Finance Minister Dwight Duncan told reporters.
“We have held the rate of growth and expenditures pretty much to budget in spite of the challenges we’ve seen in the economy and we’ve laid out a plan and obviously we are on track to achieve that plan.”
Ontario expects a deficit of about C$19.7 billion for 2010-11, despite previous optimism that the number would decrease sooner to balance the budget before 2017-18 as forecasted in the spring budget.
The government said private-sector forecasters now expected real GDP growth in the province of 3.9 percent this year, compared with a March average forecast of 3.0 percent average in March and the 2.7 percent growth assumed by the government in its March budget estimates.
For 2011, the average private-sector forecast has cooled from 3.2 percent to 2.8 percent, lower than the 3.2 percent growth assumed by the province.
“Clearly the U.S. economy is struggling in growth, it’s certainly not robust at this moment and that has obvious implications for Ontario particularly within Canada,” said Duncan.
Ontario still expects to borrow C$39.73 billion in 2010-11, $4.1 billion less than the previous year’s financing.
It had borrowed C$14.0 billion by June 30, comprising C$6.3 billion on the domestic market and C$7.7 billion internationally.
Reporting by Claire Sibonney; editing by Janet Guttsman