Morneau to deliver fiscal update next week

Finance Minister Bill Morneau will deliver a fall economic update Tuesday that is expected to show an improving bottom line.

Mr. Morneau announced Thursday in the House of Commons that the fall update will be released on Oct. 24.

The government's March budget was based on the assumption that the Canadian economy would grow by 1.9 per cent in 2017, but private-sector forecasts now expect growth to come in around 3 per cent.

That is expected to allow Mr. Morneau to show that the deficit will not be as large as earlier forecasts.

The March budget projected a federal deficit of $28.5-billion for the 2017-18 fiscal year, followed by a $27.4-billion deficit the following year. Mr. Morneau has not provided a timeline for eliminating the deficit.

In recent months, he has tied Canada's strong economic performance to his government's strategy to run deficits, which helped it finance measures such as lower income-tax rates for middle-income earners and enhanced child benefits.

He also says the government is sticking to a plan to invest more than $180-billion in infrastructure over the next 11 years, adding to annual, multibillion-dollar shortfalls across Ottawa's five-year budgetary outlook – and perhaps beyond.

Opposition Conservatives have long been critical of the government's plan to add to the federal debt to fund new measures, while some economists have urged Ottawa to limit fiscal uncertainty by mapping out a plan to return to balance.

With a file from The Canadian Press