Canada 11-Month Surplus Puts Morneau's Deficit Call in Doubt

  • Liberal government posts C$7.5 surplus from April to February
  • Report fuels opposition attacks government is fudging numbers

Canada was on pace to run a significant surplus for the last fiscal year, monthly data released Friday show, calling into question the federal government’s projection of a full-year deficit.

The government raised C$3.2 billion ($2.6 billion) more than it spent in February, giving it a surplus of C$7.5 billion for the first eleven months of the fiscal year that ended March 31, the finance department said in a statement. The government had forecast a deficit of C$5.4 billion for the fiscal year when it released its 2016 fiscal plan last month.

Whether Canada ran a deficit or a surplus in the last fiscal year has become a political issue, with Finance Minister Bill Morneau and the new Liberal Party government saying they inherited a deficit from the previous Conservative government and the figures will attest to that once final numbers are released. Friday’s numbers also validate suggestions the fiscal outlook may not be as dire for Canada as the government has forecast.

“The talking lines from the minister from the get go was the assertion the Conservatives left them in a terrible situation,” said Lisa Raitt, a lawmaker with the opposition Conservatives. “We know that not to be the fact.”

Speaking to reporters in Quebec City, Morneau said the budget balance tends to deteriorate at the end of a fiscal year. He didn’t comment on whether he still expects a surplus for the last fiscal year.

“We don’t want to focus on this issue, we’d rather focus on what’s important for Canadians, which is dealing with the fact that we’ve been in a low-growth era and that we need to grow the economy for the future,” the finance minister said.

Since the Liberals took power in November, Canada’s two main parties have each accused each other of misrepresenting budget numbers. The Liberals said the Conservatives massaged numbers in their pursuit of balanced budgets. The Conservatives claim Morneau’s budget last month lacks transparency partly because it inflates the likely size of deficits.

While the Liberals have budgeted almost C$120 billion in deficits over six years, Morneau has built in an annual C$6 billion risk adjustment that is inflating those numbers.

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