Newspaper article The Canadian Press

Soft Economy Hitting Ottawa's Revenues, but Deficit Goal Still on Track

Newspaper article The Canadian Press

Soft Economy Hitting Ottawa's Revenues, but Deficit Goal Still on Track

Article excerpt

Ottawa's posts $1.9B deficit in November

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OTTAWA - The federal deficit expanded beyond last year's pace in November as revenues dropped outright for the second time in three months amid a slowing economy, the Department of Finance reported Friday.

The weaker than expected results added $1.85 billion to the overall deficit, compared to $1.6 billion at this time last year.

That lifted Ottawa's fiscal deficit for the year so far -- eight months in -- to $12.4 billion.

Still, the government is doing better than it was at this point last year, when the red ink had reached $15.5 billion on route to a final $26.2 billion deficit.

In the fall economic update, the department had predicted the final shortfall for this year, the 2012-2013 period, would come in at $26 billion.

In comments from Davos, Switzerland, Finance Minister Jim Flaherty said he still believes the budget will be balanced by 2015.

"We're on track. We have some growth challenges, particularly with regards to commodities prices, but we've built a lot of that into our fiscal track," he said in a television interview. "So we're OK for a balanced budget in this Parliament, which means 2015."

Earlier in the week, Prime Minister Stephen Harper cautioned that the weak global economy in the second half of the year was having a "fiscal impact" on the government.

Still, Flaherty has built a sizable buffer for slower growth in his budget projections that can absorb $3 billion a year in reduced revenues or higher costs while staying on course.

The major take-away from the November numbers was the $56 million fall-off in tax revenues to $19.9 billion, the second decline in three months. The previous dip was $25 million in September, but before that, Ottawa had seen nothing but positive increases in tax revenues dating back to November 2011.

TD Bank economist Sonya Gulati said it is still too early to say whether the September and November numbers are part of a trend. …

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