Canada's government expects $2.3 billion deficit

Staff Writer
Columbus CEO

TORONTO (AP) — Canada's new Liberal government has inherited billions of dollars of deficits, the finance minister said Friday.

Bill Morneau said that without accounting for planned Liberal spending and stimulus measures, the deficit would be US$2.3 billion (CA$3.0 billion) in the current fiscal year and $US2.9 billion (CA$3.9 billion) in 2016-17, with deficits continuing through 2018-19.

However, Morneau said the government will fulfill its pledge to balance the books before the next election despite the weaker economic environment and the steeper fiscal obstacles.

In April, the former Conservative government had predicted a $2.7-billion surplus. The new government noted that economic conditions have deteriorated since the April budget because of higher expenses and lower revenues tied in part to stubbornly low commodity prices, global uncertainty and the weak performance by the U.S. economy to start the year.

"Risks to the Canadian outlook remain tilted to the downside," the update said, adding that monthly economic growth has picked up again in recent months after a contraction over the first two quarters of 2015, which is considered a technical recession.

The update also contains average forecasts made last month by private-sector economists.

The economists downgraded the April projections for real gross domestic product — the common measure of economic growth — to an average of 1.9 percent from 2015 to 2019, from 2.1.

They also lowered their predictions for crude oil prices to an average of US$61 per barrel from 2015 to 2019, from US$70.