Federal deficit totalled $600M in December, $13B for fiscal year so far

OTTAWA – The federal government ran a deficit of $600 million in December, bringing the total for the first nine months of the current financial year to $13 billion.

The December deficit was $100 million higher than in the final month of 2011 but the nine-month total was $3.1 billion lower thanks to savings in previous months of the current financial year.

In its November fiscal update, the government said it expected to post a $26 billion deficit for the year, up $5 billion from the March budget forecast.

TD Bank economist Jonathan Bendiner said Friday the nine-month results suggests the government could be slightly ahead of its target.

“However, given the lack of momentum currently seen in the Canadian economy over recent months, there may be room for the deficit to grow in the final stretch of fiscal year 2012-13,” Bendiner wrote in a report.

“There have also been signals that the depressed oil price environment faced by Canadian oil producers will have an impact on fiscal coffers.”

Earlier this month, Finance Minister Jim Flaherty cautioned that government revenues were being hurt by lower-than-expected commodity prices, particularly Alberta crude, which is being sold as a discount to world prices due in part to limits in pipeline capacity.

The December deficit grew as program expenses increased by $700 million from a year earlier to $20.3 billion for the month.

Payments for benefits for the elderly increased by $200 million, while employment insurance benefit payments increased by $200 million. Children’s benefits increased by $15 million.

Meanwhile, major transfers to other levels of government increased by $600 million, while direct program spending was down $200 million.

The federal government’s revenue grew by $600 million to $22.2 billion, with personal income tax revenues up $1 billion and corporate income tax revenues were down $400 million.

Non-resident income tax revenues were down $200 million, while excise taxes and duties were up $400 million, due to an increase in GST revenue.

EI premium revenues were up $44 million and other revenues were down $200 million.

Public debt charges dropped by about $100 million.