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Canada's Deficit On Downward Track

by Mike Godfrey,, Washington

16 October 2012

Canada's deficit has more than halved since 2010, standing at CAD26.2bn (USD26.7bn) at the end of the 2012 financial year.

The figures are included in the Annual Financial Report of the Government of Canada, released by Finance Minister Jim Flaherty. The report shows that the deficit fell by CAD7.2bn last financial year, from CAD33.4bn in 2010-11. The new deficit total of CAD26.2bn is less than half that of CAD55.6bn in 2009-10.

In addition, direct government spending as a share of gross domestic product (GDP) fell by 0.6% in 2011-12 compared with 2010-11 levels. Canada’s total government net debt-to-GDP ratio, which includes the net debt of the federal, provincial/territorial and local governments, as well as the net assets held in the Canada Pension Plan and Québec Pension Plan, stood at 33.3%.

Commenting on the figures, Flaherty said that the economy's performance was encouraging, and reflects Canada’s sound economic and fiscal fundamentals. He added that the government remains committed to its goal of returning to balanced budgets over the medium-term, but did warn that there are downside risks to the fiscal outlook contained in his most recent budget.

Flaherty will provide further details of the economic and fiscal outlook in the autumn Update of Economic and Fiscal Projections.

TAGS: economics | fiscal policy | gross domestic product (GDP) | budget | Canada

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