Canada will move decisively into surplus in the fiscal year that begins April 2015, Finance Minister Jim Flaherty said today.
Speaking to reporters after meeting economists in Ottawa today, Flaherty said the surplus that year won’t be “tiny.”
“I can tell you that the plan is to budget a surplus in 2015, and not a tiny surplus,” Flaherty said. “There’ll be no doubt that we’re balanced in 2015.”
Earlier today, the Parliamentary Budget Officer issued a report forecasting a C$200 million ($192 million) surplus for that year. Flaherty, who predicted an C$800 million surplus in his March budget, said the budget officer’s projections didn’t take into account a freeze on government operating spending.
Final 2012-13 numbers released by the finance department last week showed the deficit shrank by 28 percent to C$18.9 billion in the fiscal year ended March 31, or C$7 billion less than projected six months ago.
Craig Wright, chief economist at Royal Bank of Canada, the nation’s largest lender, said at the press conference today the lower deficit figures were a result of a “prudent budget process,” and government departments not spending all the money that was allocated to them.
“On the C$7 billion, the composition is C$5 billion on the spending side and C$2 billion revenue, so the revenue did provide a bit of a lift,” Wright said. Public-sector constraints will “further enhance the ability to get to smaller deficits and eventually to a surplus.”
Flaherty said he has no intentions of intervening further in the housing market, although his department is monitoring the acceleration in some areas.
Output forecasts released by the finance department in June are still valid, Flaherty said, adding that while global challenges will continue to crimp growth, Canada will see a modest but real expansion. The rotation to private-sector jobs from the public sector is healthy, he said.