The federal cost of disaster relief for this year’s Alberta floods pushed the monthly deficit to $3.8-billion in September, up from $2.2-billion the year before.
At the halfway mark of the current fiscal year, the size of the federal deficit stood at $10.7-billion, which is up from the $9.4-billion in the same period the previous year.
The numbers are contained in Finance Canada’s monthly fiscal monitor report, which tracks federal expenses and revenues.
The report states that Ottawa booked two major one-time items in September: a $2.8-billion liability for the Alberta flood disaster assistance and a gain of roughly $700-million from the sale of 30 million General Motors shares that were purchased during the 2008 auto bailout.
Finance Canada states that if it were not for those two entries, the deficit for the first six months of the year would have been $8.6-billion.
Earlier this month, Finance Minister Jim Flaherty released a fiscal update that forecasted a deficit of $17.9-billion in the current fiscal year, followed by a $5.5-billion deficit in 2014-15 and a surplus of $3.7-billion in 2015-16.
That update said the government would be looking to sell federal assets, which would help Ottawa erase the deficit. This week Ottawa announced that it has sold the Canadian High Commission in London for $530-million to a developer from India.
Mr. Flaherty’s budget numbers are based on an average forecast from private sector economists. On Friday, Statistics Canada reported that the Canadian economy beat expectations in the third quarter, growing at 2.7 per cent, slightly above the consensus forecast of 2.5 per cent.
The increase from the second to the third quarter is partly because of the drag on growth created in the second quarter by the Alberta floods in June and a Quebec construction strike.
The higher third quarter number should not make much of a difference to Ottawa’s forecasts. The recent fiscal update assumed 1.7 per cent growth for 2013. In a research note, National Bank Senior Economist Krishen Rangasamy estimated that with the latest quarterly data, “the growth rate for 2013 may end up at around 1.7 per cent.”