It looks like the Harper government will need more time to bring this country's finances into shape than it first thought.
The Federal Government’s Economic and Fiscal Update, released Tuesday, indicated a delay in balancing the budget by one year. On an "official" basis, which excludes the savings from the government's Strategic Operating Review, a surplus of $500 million would be achieved in 2016/17, compared to a $4.2-billion surplus projected for 2015/16 in last June's federal budget.
If the strategic operating savings are included, the budget would be balanced by fiscal 2015/16 with a $600-million surplus, which, again, is a year later from the $3.4-billion surplus projected for 2014/15 in the June 2011 Budget.
Slower-than-expected economic growth this year, combined with a number of downside risks to the economy that could affect growth in the future, have significantly altered the expected revenue and expenditure profiles.
Factors contributing to this altered projection include higher oil prices, supply chain disruptions from natural disasters and slower U.S. growth. At the time of the budget, the average private sector forecasts for Canadian real GDP growth in 2011 and 2012 were 2.9% and 2.8%, respectively. These have now been scaled back to 2.2% for '11 and 2.1% for '12.
