12/16/2014 12:31 EST | Updated 02/15/2015 05:59 EST

Harper: Falling Oil Prices Won't Derail Balanced Budget Next Year

QUEBEC - Falling oil prices will reduce Ottawa's fiscal flexibility but will not prevent the government from posting a balanced budget next year, Prime Minister Stephen Harper said Tuesday.

"You should be under no doubt that the government will balance its budget next year," he said in Quebec City after a local announcement. "We are well within that range. Even with dramatically lower oil prices, we will balance the budget.

"This will obviously reduce some of our fiscal flexibility but it will not by any means stop us from reaching a balance and at the same time making the important investments we've made."

Ottawa announced Nov. 25 it would post a $1.6-billion surplus in 2015-16.

That was lower than a $1.9-billion estimate two weeks earlier and only a quarter of the $6.4-billion prediction the government projected in last spring's budget.

The Finance Department said the $1.6 billion factored in a $5.8-billion infrastructure announcement Harper made on Nov. 24.

On Tuesday, Harper took a jab at Russian President Vladimir Putin as he tried to downplay the effect of plunging oil prices on the Canadian and the Albertan economies.

"We are all noticing the difficulties that are emerging in Russia, partly because of falling oil prices, partly because of poor governance of the economy and also partly because of sanctions that have been imposed by us and by our allies," he said.

"And obviously, as these factors bite, we encourage Mr. Putin to respect the sovereignty and territorial integrity of his neighbours and also to act in a way that is less aggressive toward the international community."

The Russian ruble has lost about 40 per cent of its value since January, battered by western sanctions imposed over the conflict in eastern Ukraine and the drop in the price of oil, the backbone of the Russian economy.

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