23 Jan 2009

Canada expected to post C$34b budget deficit

3:04 pm on 23 January 2009

Canada expects to post a deficit of C$64 billion over the next two fiscal years, before returning to surplus in five years.

The deficits will mark an end to more than a decade of surpluses for Canada.

An aide to Prime Minister Stephen Harper said the deficit would be C$34 billion in the fiscal year starting 1 April and C$30 billion in the following year, and deficits would dwindle thereafter.

The figure of C$34 billion represents roughly 2% of the value of the Canadian economy.

Tthe government is to deliver its annual budget on Tuesday.

Opposition parties have said they accept the need for short-term deficits but have criticized the government for earlier tax cuts that had eliminated surpluses.

The Bank of Canada lowered the Official Cash Rate to 1% on Tuesday.