December 17, 2010 / 4:05 PM / in 7 years

Canada budget deficit gets bigger in October

OTTAWA (Reuters) - Canada’s budget deficit rose in October to C$4.11 billion ($4.07 billion) from C$3.30 billion in the same month last year, mainly due to larger transfer payments for health, employment insurance and other social benefits, the government said on Friday.

In the first seven months of the 2010-11 fiscal year, the budget shortfall totaled C$21.54 billion, down from C$31.95 billion in the same period a year earlier.

Revenue in the month climbed 0.4 percent as higher intake from personal income tax partly offset lower revenues from corporate income tax and the sales tax. Expenses increased 4.4 percent because of the transfer payments.

In the April-October period, revenues jumped 6.6 percent while expenses fell 2.2 percent from a year earlier, when the government was paying for its bailout of the auto industry.

After a decade of surpluses, Canada dropped into a deficit after it launched a stimulus spending program to deal with the global financial crisis. The 2009-10 deficit totaled C$55.6 billion, or 3.6 percent of gross domestic product.

Ottawa aims to shrink that shortfall to C$45.4 billion in 2010-11 and return to surplus in 2015-16.

($1=$1.01 Canadian)

Reporting by Louise Egan; editing by Peter Galloway

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