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Watchdog sees Canada budget surplus turning into narrow deficit

Published 2015-07-22, 10:35 a/m
Watchdog sees Canada budget surplus turning into narrow deficit

OTTAWA, July 22 (Reuters) - Canada's narrow budget surplus
in the current fiscal year would turn into a small deficit if
economic growth turns out to be as weak as the Bank of Canada
forecast last week, the country's parliamentary budget watchdog
said on Wednesday.
The office of the Parliamentary Budget Officer (PBO), which
has a mandate to provide independent analysis to lawmakers,
forecast a deficit of C$1.0 billion ($770 million) in 2015-16,
after using up the budget's C$1 billion contingency reserve and
factoring in other economic developments.
The federal budget in April had shown a C$1.4 billion
surplus plus the reserve. The economy has struggled since then
due to the weaker price for oil, a major Canadian export.
The Conservative government's stewardship of the economy has
become a central issue ahead of an Oct. 19 election. The finance
minister has pledged to eke out a budget surplus this year.
The PBO report forecast that the government's projection of
a C$1.7 billion surplus for 2016-17 would be reduced to C$600
million after using up the reserve.
The PBO did the new calculations at the request of the
opposition New Democratic Party after the central bank
downgraded its real growth forecast for calendar 2015 to 1.1
percent from 1.9 percent because of lower oil prices. The budget
had assumed 2.0 percent growth, based on private-sector
forecasts.
The PBO analysis assumes government spending plans would
remain as in the budget, though governments do sometimes spend
less than budgeted.
($1=$1.30 Canadian)

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