Canada's deficit to top $50 bn: finance minister
Canada was not expected to see another surplus until 2014
By Agencies |
TORONTO: Canada's finance minister said Tuesday the federal deficit will soar to a record 50 billion Canadian dollars ($44 billion) this fiscal year because the deep recession is wreaking havoc on the government treasury.
Finance Minster Jim Flaherty said Tuesday that the budget will run over CA$16 billion ($14 billion) more than he forecast in January's federal budget.
``We are going through a deeper economic slowdown than anticipated,'' he said. ``The systemic stabilizers that we have automatically _ more employment insurance, a couple of billion dollars, plus more, and lower taxes _ are to be expected during a recession, which we are seeing.''
Flaherty added that the federal and provincial government's bailout of the struggling auto sector has also contributed to the higher deficit estimate.
January's federal budget predicted five years of deficits with a shortfall of CA$64 billion ($57 billion) over the next two years _ a figure that will now climb to over CA$80 billion ($71 billion).
Two months before that, the government was touting years of surpluses in its fall economic update.
On Monday, Flaherty said that the deep recession will cause the deficit to balloon substantially more than projected.
He said the recession has hurt government revenues from personal and corporate taxes and raised spending requirements.
Canada's central bank has said the country's gross domestic product fell 7.3 percent in the first three months of 2009, dropping at the steepest pace in decades. The Bank of Canada said that's the biggest contraction since comparable records began being kept in 1961.
Canada has avoided bank bailouts and none of its major financial institutions have failed. However, Canada and its economically hard-hit neighbor, the United States, have the largest trading relationship in the world and the financial crisis and the global sell-off of commodities have hit Canada hard since last fall.
The government unveiled a $32 billion economic stimulus package in January.
But heavy job losses have hurt the economy with a record 273,300 jobs lost in the first three months of the year.
Finance Minster Jim Flaherty said Tuesday that the budget will run over CA$16 billion ($14 billion) more than he forecast in January's federal budget.
``We are going through a deeper economic slowdown than anticipated,'' he said. ``The systemic stabilizers that we have automatically _ more employment insurance, a couple of billion dollars, plus more, and lower taxes _ are to be expected during a recession, which we are seeing.''
Flaherty added that the federal and provincial government's bailout of the struggling auto sector has also contributed to the higher deficit estimate.
January's federal budget predicted five years of deficits with a shortfall of CA$64 billion ($57 billion) over the next two years _ a figure that will now climb to over CA$80 billion ($71 billion).
Two months before that, the government was touting years of surpluses in its fall economic update.
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On Monday, Flaherty said that the deep recession will cause the deficit to balloon substantially more than projected.
He said the recession has hurt government revenues from personal and corporate taxes and raised spending requirements.
Canada's central bank has said the country's gross domestic product fell 7.3 percent in the first three months of 2009, dropping at the steepest pace in decades. The Bank of Canada said that's the biggest contraction since comparable records began being kept in 1961.
Canada has avoided bank bailouts and none of its major financial institutions have failed. However, Canada and its economically hard-hit neighbor, the United States, have the largest trading relationship in the world and the financial crisis and the global sell-off of commodities have hit Canada hard since last fall.
ADVERTISEMENT
The government unveiled a $32 billion economic stimulus package in January.
But heavy job losses have hurt the economy with a record 273,300 jobs lost in the first three months of the year.
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