OTTAWA Feb 3 Canada's budget watchdog forecast
on Friday that the government will have a smaller-than-expected
deficit in the current fiscal year, largely as a result of
higher revenue from corporate income taxes and a lag in planned
Canada will see a deficit of C$20.5 billion ($15.74 billion)
in fiscal 2016-2017, the Parliamentary Budget Officer (PBO)
said, smaller than the deficit of C$25.1 billion the government
forecast in its fiscal update last November.
The report is based on data up to the end of January. The
fiscal year ends in March.
PBO forecast revenue of C$293.7 billion, exceeding the
government's forecast of C$291.1 billion. While revenue from
personal income taxes has lagged the watchdog's projections, it
has been offset by higher-than-expected revenue from corporate
income taxes and other sources.
Canada's Liberal government, which is expected to release
its latest budget in the coming months, has forecast deficits
for the next several years as it spends on infrastructure in
order to boost the economy.
Elected in 2015, the government has been criticized by the
opposition for not having a plan to balance the budget.
The PBO report forecast slightly lower total expenses of
C$314.2 billion, compared to the government's expectation of
C$316.1 billion. Program expenses in the first eight months of
the fiscal year have been weaker than expected due to delays in
implementing new infrastructure investments, the report said.
PBO said it does not expect the government will spend all
the money for housing and infrastructure investment it had
anticipated. The watchdog on Thursday said the government has
found projects for only a small amount of its planned
PBO also forecast the Canadian economy grew 1.3 percent last
year, slightly higher than the government's forecast for 1.2
percent growth. The improvement was due to Statistics Canada's
upward revisions to figures on exports and government spending
in the first half of 2016.
($1 = 1.3028 Canadian dollars)
(Reporting by Leah Schnurr; Editing by Paul Simao)