OTTAWA – Preliminary figures suggest Canada's budget deficit for the fiscal year just ended is slightly smaller than originally forecast, although it remains on pace to be the largest annual shortfall in four years.
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The return of hefty deficits in Ottawa reflects the Liberal government's push which began in earnest last year to deliver tax relief and infrastructure spending to stoke economic growth. Next week, the national data agency releases gross domestic product figures for the first quarter, and economists predict it will show the fastest pace of growth in nearly six years and tops among the Group of Seven countries in the January-to-March period.
Canada posted a budget deficit in March of 10.39 billion Canadian dollars ($7.72 billion), compared with a C$9.44 billion deficit a year earlier, the Finance Department's monthly fiscal monitor publication indicated.
Canadian public-finance data historically tend to show a relatively large budget deficit in March due to adjustments to tax receipts.
For the 2016-17 fiscal year, ended March 31, early estimates suggest Canada posted a C$21.85 billion deficit, versus a forecast shortfall of C$23 billion, or 1.1% of the country's gross domestic product.
The Finance Department said the results are not final, as tax revenue totals could be adjusted to reflect assessments of tax-filing returns. Taking year-end adjustments into account, results to date are broadly in line with forecasts.
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With an annual deficit in the low C$20 billion range, it will mark the biggest Canadian budget shortfall since 2013. Canada's budget deficit peaked on a nominal basis in 2010 at C$55.60 billion, due to the negative fallout from the financial crisis and the previous Conservative government's decision to launch a multiyear, multibillion stimulus program to mitigate economic damage.
Canada briefly returned to a budget surplus situation in the 2014-15 fiscal year, but returned to deficit the following year as the economy took an income hit from the commodity-price swoon.
March's public-finance figures indicate revenue rose 4.2% to C$25.11 billion, while expenditures on government programs and administration climbed 5.3% to C$33.16 billion. Public-debt charges surged 14.2% to C$2.34 billion, which the government said reflected higher inflation adjustments on real-return bonds, which are much like Treasury inflation-protected securities.
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(END) Dow Jones Newswires
May 26, 2017 11:27 ET (15:27 GMT)