OTTAWA, May 26 – The Canadian government will post a "substantially" larger deficit this year than forecast in its January budget as the economy has fared worse than expected, the finance minister said on Monday.
"The economic slowdown is more severe than we anticipated," Finance Minister Jim Flaherty told a press conference after meeting with his provincial counterparts at Meech Lake, on the outskirts of the capital.
"That means lower tax revenues."
And so, "the deficit will be substantially more than was anticipated in the January budget," he said, adding that he would provide more fiscal details in an economic update to be presented to parliament in June.
Flaherty unveiled a federal budget in January that forecast the nation\’s first deficit in more than a decade, topping 33.7 billion Canadian dollars (30.0 billion US), due largely to a massive stimulus package.
Canada was not expected to see another surplus until 2014. Its last deficit, in 1996, was 8.9 billion dollars (7.2 billion US).
"These are extraordinary times requiring extraordinary measures," Flaherty commented. "We will do what we have to do to protect the Canadian economy and to cushion the impact on Canadians of this recession."
He also said that he and his provincial counterparts made "significant progress" toward a combined federal-provincial corporate tax rate of 25 percent by 2013.