01/14/2015 03:43 EST | Updated 03/16/2015 05:59 EDT

Joe Oliver vows to balance budget despite falling oil prices

Finance Minister Joe Oliver says the government is confident it will balance the next federal budget without scaling back on new tax measures, despite falling oil prices.

"The commitments we have made, we will honour," Oliver said in Vancouver on Wednesday. 

TD Economics updated its forecast on Tuesday to project a $2.3-billion deficit in 2015-16 followed by a $600-million deficit for 2016-17. Under the new forecast, the government would return to surplus for the fiscal year 2017-18 rather than post a $1.6-billion surplus in 2015-16.

The new outlook concludes that deficits over the next two years will make it difficult for the government to deliver on promises such as doubling the contribution limit of the tax free savings account or the introduction of the adult fitness tax credit. 

"In the absence of new measures to raise revenues or cut spending," the report said, "introducing significant new policy measures … in the current fiscal environment will be a challenge."

The report, however, also notes the government could tap into its $3-billion a year contingency fund to post a slim surplus.

"These expected deficits are less than the federal government’s annual $3 billion set aside for contingencies. As such, surpluses over the next couple of years cannot be ruled out."

Alberta Premier Jim Prentice acknowledged on Tuesday that falling oil prices will have an effect on the province's budget for the next three fiscal years.

While he did disagree with the Conference Board of Canada's assessment that Alberta could slip into a recession, Prentice said he was prepared to discuss the need for a sales tax.

Prime Minister Stephen Harper said last month that despite falling oil prices there was “no doubt that the government will balance its budget next year.”