2

Will Finance really stick to its deficit prediction for 2015?

After 11 months of surpluses, Ottawa still says 2015 will end with an annual deficit. March will have to be a horrible month.


 
Finance Minister Bill Morneau listens to panel discussion at the Munk School of Global Affairs in Toronto on Wednesday, January 13, 2016. (Peter Power/CP)

Finance Minister Bill Morneau listens to panel discussion at the Munk School of Global Affairs in Toronto on Wednesday, January 13, 2016. (Peter Power/CP)

The January Fiscal Monitor was released along with the budget, and the Department of Finance is still sticking to its story for the 2014-15 budget balance. (See here, here and here for earlier analysis.) Although the budget balance over the first 10 months of the fiscal year (April 2015-January 2016) is a surplus of $4.3 billion, and even though Finance anticipates another surplus for February, the budget is calling for a deficit of $5.4 billion dollars for fiscal year 2014-15. The government usually runs a deficit in March as year-end bills come due, but a $10 billion swing would be exceptional; the March 2015 deficit was only $3 billion.

Gordon


 
Filed under:

Will Finance really stick to its deficit prediction for 2015?

  1. Morneau stuffed $4 billion in new veteran’s spending into the current expiring fiscal year, to make sure this year was a deficit, and to prevent the first full year of his budget from having a deficit of nearly $34 billion instead of $30 billion.

  2. The annual value of the budget balance is irrelevant for a currency issuing government. We should always assess against general economic conditions (i.e. private sector savings preferences and the current account) and adjust the budget as necessary to achieve full employment.

    Given the balances in the non-government sectors, we should be running federal deficits effectively indefinitely.

Sign in to comment.