‘Modest’ Deficits Predicted for Next 3 Years: Budget Officer

(CBC News)

Canada is unlikely to avoid the effects of an expected global recession and faces the possibility of a deficit for the next three budgets, says a report by Canada’s independent parliamentary budget officer.

Kevin Page gave the sobering outlook on Thursday morning in his first fiscal and economic assessment of the country. “While the year-to-date fiscal results, as well as all of our projection scenarios, suggest a modest surplus in 2008-09, it will be some time before the implications for revenues of the recent financial market turmoil are known,” the report says. “As a result, a deficit for this fiscal year is a distinct possibility.”

The report also projects “modest deficits” of $3.9 billion in 2009-10 and $1.4 billion in 2010-11, with a return to modest surpluses of $1.6 billion in 2011-12 and $3 billion in 2012-13.

The parliamentary budget office’s analysis is based on current government plans, assuming there are no major fiscal policy changes.

Page briefed members of Parliament behind closed doors about his report on recent economic developments, employment trends, federal expenditure and taxing decisions before releasing it to the public.

Page and his staff spent the last couple of months crunching numbers and consulting with 18 different private sector financial institutions and watchers, looking for what they are calling the “consensus” view of the economy. They then conducted their own analysis. The goal was to provide parliamentarians with an assessment of the economy from non-politicians.

The report comes a week before Finance Minister Jim Flaherty delivers the government’s economic update. It also comes a day after the government delivered a throne speech suggesting the country may have to run a deficit.

The parliamentary budget officer is a new post, first promised by the Tories in their 2006 election platform to provide an “independent” source of information to MPs on economic policy.