Canadian Deficit Going To Be Less Than Expected
Canada’s Deficit Shrinks
There was some good news from the federal government this week as the government discovered there may be less of a deficit for the economy than was original thought. In February, the government ran with a budget deficit of nearly $1 billion, which would make it the smallest monthly shortfall in the space of a year. Now, with one month left in the fiscal year for the government, it looks like the deficit is going to be less than the $53.8 billion originally estimated by the government. Thanks to the small shortfall within February, and with the surplus from one year earlier that amounted to $817 million, the total shortfall for the fiscal year in Canada is only going to be $40.5. Yes, that is quite a significant number, especially considering that last year the government had a $1.3 billion surplus last year during the same 11 months. However, it is all in how you look at it. The $40.5 billion shortfall is pretty bad, but with it being $13.8 billion less than what was originally expected, you have to consider that to be a win.
The Finance Department considers this good indication that while the economy still is pretty weak, the Action Plan of the government is helping to improve things and lessen the hit that the government and the country are taking from the extended recession that began in late-2008.
Almost half of the deficit came in February when the government began doing economic stimulus spending. During that month, $18 billion was spent to get the economy moving. The government also saw its revenues fall drastically compared with the previous fiscal year. Revenues were down to $16.9 billion, which is a 7.9 percent drop. Program spending increased to $26.4 billion, or by 14.4 percent because of the higher amount of individuals currently on employment insurance payments, as well as the bailout of the automotive industry.
The public debt charge did fall by $1.5 billion thanks to the lower interest rates, which are now increasing as the government tries to stem the incredible growth of the real estate industry to prevent another collapse. In the federal budget released in March, Finance Minister Jim Flaherty announced that there would be spending restraints. Coupled with the stimulus program of the government, this is expected to reduce the deficit of the budget to $27.6 billion by the fiscal year of 2011-12. It is expected that the budget will be balanced by 2014-15.
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This entry was posted on Friday, April 30th, 2010 at 9:26 pm and is filed under Canada. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
