Deficit may be smaller than anticipated

Economic recovery leads to $5-$10 billion increase in government revenues


The federal deficit for 2009-2010 came in well under Finance Minister Jim Flaherty’s projections according to a report in La Presse. Flaherty’s March budget predicted a shortfall of about $54 billion for 2009-2010, but economists believe the rapidly improving economy could have boosted government revenues by some $5 billion. Over the course of the first 10 months of the government’s fiscal year, which ended March 31, Ottawa was $39.6 billion in the red and economists believe it’s unlikely the final two months would bring an additional $14 billion worth of debt. According to one bank’s top economist, the outlook for this year’s deficit is even rosier, which could translate into a shortfall that’s $10 billion less than Flaherty projected.

La Presse

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Deficit may be smaller than anticipated

  1. Huzzah!

    • The deficit is smaller than most countries, but still not small enough. I'll second a huzzah! though. Less debt means less interest, which means lower taxes.

      • Wishful thinking, RG. Less debt means less interest, which means room for national daycare, or high-speed rail, or just-one-more-please-pretty-please "investment" in some Bombardier airplane design, which means more taxes…

  2. We'll have to wait until June or so after the tax refunds have been processed.

    Remember too that a lot of this may have to do with stimulus spending that has been moved from the March 2010 fiscal year into the March 2011 fiscal year.

    But most importantly, interest rates are going up. A 1% move in interest rates is going to add close to 5-6 billion to the annual debt. There will be collateral damage from rising rates, not least of which will be the reset of mortgage rates that is going to ripple through the economy.

  3. I wish I could cheer Flaherty for his innate tendency to make conservative budget estimates, but unfortunately this seems more like a fluke than a case of "we estimated low to be on the safe side, and now we're reaping the benefits."

    Also, "yay, the shortfall is smaller than we thought it would be" is not much to rejoice over when the shortfall could have (and should have) been a surplus had spending been cut appropriately.

    • Yes, yes, a thousand times yes!

      If Flaherty even tries to push the looks-like-our-stimulus-worked-wonders garbage…

      • I don't think he's got quite that much chutzpah. *crosses fingers*

  4. I think it would be prudent to wait till the ink is dry on the books before congratulating Flaherty. Who are these unnamed "economists" quoted here and who is the unnamed journalist? And how is it that jouranlists like this one feel free to speak glowingly about the economic recovery without once mentioning the million or so unemployed? This article should not have been published.

    • The journalist is Joël-Denis Bellavance and the economist is Stéfane Marion, chief economist of National Bank.

  5. What a bunch of begrudgers! or is it just sour grape Libs?

  6. Don't all governments keep a secret supply of funds that can be dragged out at election time to buy our votes? Nothing just "happens"!

  7. Canada's Not-So-New Government: only slightly less abusive of the future than you thought.

    Call the sign-makers, we have a new slogan…

  8. "Many stimulus projects slow to get off ground
    Most no more than 25% complete; 861 yet to begin, analysis shows
    By Glen McGregor, The Ottawa CitizenApril 6, 2010"

    Not being an economist, accountant, whatever, it's not clear to me how the actual spending is handled, but if only 25% of the $47.2 billion in stimulus spending has actually been spent, that would seem to account for reducing the projected deficit by about $35 billion. It would be interesting to know how much of that 25% has gone to Conservative ridings. Since stimulus spending doesn't seem to have been a major factor in the apparent recovery, would the gov. consider cancelling the program before the other 75% is spent?

  9. All of a sudden there is silence from the Liberals and Kevin Page. Could it be that they don't like to talk about good news?

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