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Canada's deficit lower than expected

02-16-2011 15:50 BJT

OTTAWA, Feb. 15 (Xinhua) -- Canada's budget deficit will come in 5 billion Canadian dollars lower than predicted by the government one year ago, parliamentary budget officer Kevin Page said Tuesday.

Kevin Page predicted that the deficit will be less than 40 billion this fiscal year. In last spring's budget, Finance Minister Jim Flaherty said the deficit would be at least 45 billion. The deficit for the first eight months of the fiscal year, to the end of November, came to 26 billion. That compared with 36.3 billion a year earlier.

Canada last had a balanced budget in the 2005-2006 fiscal year.Page credits an improvement in the economy for the improvement in the national government's finances.

"The reduction in the budgetary deficit over the medium term largely reflects a cyclical improvement, with the economy reaching its potential by the end of 2016," Page told a parliamentary committee. "That said, a budgetary deficit remains."

Page predicts the national government deficit will fall from 56 billion or 3.6 percent of GDP in 2009-10 to 10 billion (0.5 percent of GDP) in 2015-16. The federal debt is projected to rise from 519 billion or 34 percent of GDP in 2009-10 to 652 billion or 31.9 percent of GDP in 2015-16.

But in the medium and long term, Canada's financial situation faces huge challenges, Page said. He told parliamentarians that the country will have serious problems paying for pensions and health care for its aging population.

Canada's economy had 7.8 workers for every citizen it had over 65 years old in 1971. But that ratio fell to 5.1 in 2008, and is projected to be 3.8 in 2019 and as low as 2.5 in 2033.

"Growth in labor supply will fall dramatically due to slower population growth and the retirement of the baby boom generation," Page warned.

Editor:Du Xiaodan |Source: Xinhua

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