07/26/2013 12:30 EDT | Updated 09/25/2013 05:12 EDT

Federal deficit widens as expenditures grow

The federal deficit widened to $2.7 billion in the first two months of the current fiscal year, the finance department announced Friday.

The shortfall in April and May was 50 per cent larger than the $1.8 billion deficit recorded in the same period a year earlier, after revisions were made to the method used in calculating monthly income tax revenues.

Revenues in the first two months rose by $557 million to $41.8 billion on higher income tax and EI premium revenues. At the same time, program expenses grew by $1.35 billion to $39.2 billion, mainly because of higher transfer payments to persons and other levels of government.

Public debt charges rose by $106 million to $5.4 billion because of higher consumer price index adjustments on real return bonds.

In his March budget, Finance Minister Jim Flaherty projected that the current year's deficit would come in $18.7 billion for the year as a whole. Because revenues and expeditures are not processed at rigidly set intervals and are subject to revisions, it is too early in the fiscal year to determine if the government is on track with its deficit projection.

The federal budget is not expected to be balanced until 2015.