Canada says 2017/18 budget deficit to be smaller than expected

OTTAWA (Reuters) – Canada’s Liberal government unveiled a smaller-than-forecast budget deficit for 2017/18 on Tuesday as it pressed forward with more stimulus spending on families, but did not project the budget would return to balance in the next five years.

Finance Minister Bill Morneau, under fire in recent days amid conflict-of-interest allegations, pointed to stronger-than-expected economic growth as proof the Liberal strategy of deficit spending had paid dividends in the two years since Prime Minister Justin Trudeau won a surprise majority.

The deficit was projected to shrink to C$19.9 billion ($15.7 billion) this fiscal year from C$28.5 billion projected in the March budget, but the improvement included a reduction in the government’s so-called fiscal cushion to C$1.5 billion from C$3 billion in March.

The deficit was projected to shrink further, to C$18.6 billion in 2018/19 and to C$12.5 billion by the end of the budget’s five-year horizon in 2022/23. Each of those years included a C$3 billion cushion to guard against an unexpected event that could hurt the government books, a risk adjustment that economists consider prudent.

Morneau said the government would strengthen the child benefit by indexing it to inflation starting in July 2018, a pledge that will cost C$5.6 billion over five years, and increase the tax benefit for low-income workers.

($1 = 1.2674 Canadian dollars)

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.