Government Set for Surplus, Conference Board Says

(The Canadian Press)

The federal government will easily manage to avoid slipping into a deficit position despite the slumping economy and will almost certainly record higher surpluses than forecast, says a new analysis by the Conference Board of Canada.

The private sector think-tank says higher- than-projected inflation, along with other factors, have boosted government revenues and almost completely countered the impact of slower growth and tax cuts that went into effect in January.

Finance Minister Jim Flaherty had forecast a $2.3-billion surplus this fiscal year and a slim $1.3-billion surplus in 2009-2010, but the Conference Board believes Ottawa will be able to better both targets.

“Federal revenues should have been down nearly $20 billion in the first quarter, given the measures set out in last fall’s economic statement,” said chief economist Glen Hodgson. “Instead, only a ($1.1 billion) reduction is showing up in the national accounts” for the first three months of the fiscal year. Read more.