OTTAWA — Canada's budget watchdog says the federal government's medium-term deficits will likely be billions of dollars higher than what was predicted in "optimistic" Liberal forecasts. The parliamentary budget office says the government is on track to deliver annual shortfalls that will be as much as $10.8 billion higher than expected. In the near term, however, the budget office predicts the government will perform better than the projections in Finance Minister Bill Morneau's recent fiscal update. This chart from the parliamentary budget office's latest fiscal outlook shows that the Finance Dept. has much rosier expectations for the budget from 2017 on than the PBO itself. In fact, the budget office says the government is currently headed for a $1.2-billion surplus this fiscal year — a $4.2-billion swing from the Liberals' $3-billion shortfall projection for 2015-16. Parliamentary budget officer Jean-Denis Frechette projects a 2016-17 deficit that's $900 million smaller than Ottawa's forecast, but shortfalls between 2017-18 and 2020-21 that are $2.3 billion, $3.6 billion, $6.3 billion and $10.8 billion higher than current projections. The fresh projections mean additional pressure on the Liberals to live up to their election vows to keep their expected annual deficits from climbing and to balance the books in four years. Both the budget office and government numbers were crunched before factoring in the billions of dollars in election-campaign spending commitments by the Liberals.