Finance Minister Jim Flaherty will deliver the next federal budget on March 21, saying he will still eliminate a deficit by 2015 even with signs of slower economic growth.
The fiscal plan will be presented in Ottawa at about 4 p.m., Flaherty said, adding that private economists last week gave him forecasts for gross domestic product through next year that are “a little more pessimistic.”
“It’s an interim concern, it’s not a long-term concern in terms of real GDP growth,” Flaherty said at a press conference today in Ottawa. “Our target is to balance the budget in 2015. We remain on target.”
Canada’s growth forecast for this year was cut to 1.6 percent in a Bloomberg economist survey published today, slower than the 1.8 percent predicted last month and less than the Bank of Canada’s January estimate of 2 percent. Flaherty said in November he would eliminate the deficit by clamping down on spending even as he pared revenue projections by C$36 billion ($35 billion) over five years.
Canada is the only Group of Seven country with a stable top debt rating from Standard & Poor’s, Moody’s Investors Service and Fitch Ratings.
Keeping the rating and signs of slower growth have helped hold down government borrowing costs. Economists in the Bloomberg survey pared their forecast for two-year bond yields to 1.4 percent in the fourth quarter, down from 1.55 percent a month ago.
The central bank’s key interest rate will remain 1 percent until the third quarter of 2014, according to the Bloomberg economist survey. That’s two quarters later than the survey done last month, the biggest delay since November 2011.
Flaherty has pledged not to reduce transfers to individuals and provinces, or raise taxes other than closing loopholes. Instead, he is focusing on the C$120 billion Canada’s government spends on operating and capital expenses, which represents less than half of his total program spending.
The governing Conservatives already have been working to reduce the state payroll by about 19,000 workers, a pledge made in last year’s budget. This year’s fiscal plans will include the findings of a newly formed cabinet committee, led by Treasury Board President Tony Clement, delegated to uncover additional savings.