Liberals' Budget Deficit Soars .. As Promised

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OTTAWA — The federal government ran a deficit of $12.7 billion over the first eight months of its 2016-17 fiscal year — compared with a $1-billion surplus during the same period a year earlier.

The shortfall was due to a $14-billion surge in expenses, including a $7.1-billion increase in direct program costs to the treasury, the Finance Department latest monthly fiscal monitor showed Friday.

The double-digit deficit figure wasn't a surprise since the Trudeau government has pledged to run deficits over the coming years as it tries to boost the economy through infrastructure investments and larger child benefits.

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Prime Minister Justin Trudeau and Finance Minister Bill Morneau speak to media during a post-budget press conference in Ottawa, Wednesday, March 22, 2016. (Photo: The Canadian Press/Jake Wright)

The fiscal monitor said the April-to-November spike in expenses included multibillion-dollar increases in payments for child and seniors benefits as well as bigger transfers to other levels of government.

Over the same period, the government said its revenues were down $1.1 billion compared with the year before, a decline due to the one-time gain in 2015 from Ottawa's $2.1-billion sale of its holdings in General Motors.

For November alone, the report said Ottawa's books showed a $3.3-billion deficit — down from a $400-million surplus in November 2015. Overall revenues, it added, decreased by $1.7 billion in November 2016, mainly due to declines in personal and corporate tax revenues.

Finance Minister Bill Morneau's fall economic and fiscal statement projected a deficit of $25.1 billion this year, followed by annual shortfalls that are expected to shrink over the coming years to $14.6 billion in 2021-22.

The government has not provided a timeline to balance the books.

The Liberals won the 2015 election on a platform that promised annual deficits of no more than $10 billion over the next couple of years. The Liberals had also pledged to eliminate the deficit by 2019-20.

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