POLITICS

Ottawa posts $2.4B surplus for December compared with $1.2B surplus a year ago

02/27/2015 11:06 EST | Updated 04/29/2015 05:59 EDT
OTTAWA - The federal government grew its surplus for December, compared with a year ago, as revenues increased and spending fell.

Ottawa posted a surplus of nearly $2.43 billion in December compared with a surplus of $1.20 billion in December 2013, according to the Finance Department's monthly fiscal monitor.

Revenue for the month totalled $24.8 billion, up $1 billion from a year ago, helped by higher corporate tax revenue and a $900-million gain related to the transfer to Ontario of the province's portion of the government's holdings of General Motors shares.

The Ontario government sold its remaining interest in GM earlier this year to help fund infrastructure spending.

Meanwhile, federal spending for December totalled $20.2 billion, down about $200 million from a year ago. Public debt charges amounted to $2.19 billion compared with $2.16 billion the previous year.

For the first nine months of Ottawa's fiscal year, the government had a deficit of $902 million compared with a deficit of $12.18 billion for the same period a year earlier.

The government has predicted a deficit of $2.9 billion for its current fiscal year and a balanced budget in the 2015-16 fiscal year.

Finance Minister Joe Oliver has delayed the federal budget until at least April to allow more time to assess the impact of the drop in oil prices on the government's finances.

The price of oil is trading for less than half of its highs reached last summer, prompting the country's major oil companies to slash capital spending plans for this year.

"The presence of downside risks provides a degree of uncertainty for the government to achieve its budget surplus objective in the upcoming fiscal year," Royal Bank economist Laura Cooper wrote in a note to clients.

"However, the inclusion of an adjustment for risk, along with the potential for a lift to revenues stemming from improved consumer spending against a backdrop of lower energy prices, temper the risk that the government will not achieve its surplus objective in 2015/16."