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Politics Federal deficit at $5.9-billion for first half of fiscal year

Minister of Finance Bill Morneau speaks to reporters in the Foyer of the House of Commons on Parliament Hill following Question Period, in Ottawa on Thursday, Oct. 26, 2017. THE CANADIAN PRESS/Justin Tang

Justin Tang/THE CANADIAN PRESS

The size of the federal deficit was $5.9-billion at the halfway point of the fiscal year, representing an improvement over the same period a year before.

The results of Finance Canada's monthly fiscal monitor report also suggest that the government is on pace to beat its 2017-18 deficit target of $19.9-billion.

Friday's report shows Ottawa ran a $3.2-billion deficit in September, which is up from a $2.4-billion deficit in September 2016. During the six-month period from April to September, the $5.9-billion deficit represented an improvement over the $7.8-billion deficit recorded during the same six-month period the year before.

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Finance Minister Bill Morneau's October fiscal update did not announce a timeline for erasing the deficit. Instead, it outlined a scenario in which the size of deficits would decrease gradually, reaching $12.5-billion by 2022-23.

The Liberal Party campaigned in 2015 on a plan to run short-term deficits before returning the federal books to balance by 2019. That pledge was repeated in Prime Minister Justin Trudeau's Nov. 12, 2015, mandate letter to Mr. Morneau, which assigned the minister to "ensure that our fiscal plan is sustainable by meeting our fiscal anchors of balancing the budget in 2019-20 and continuing to reduce the federal debt-to-GDP ratio throughout our mandate."

Mr. Morneau has suggested that the debt-to-GDP ratio is a more important metric and that Canada's finances are healthy in that context. The October fiscal update said the federal debt-to-GDP ratio would decline from 31.2 per cent in 2016-17 to 28.5 per cent in 2022-23.

The Privy Council Office recently launched a website that tracks the government's progress in delivering on pledges from ministerial mandate letters.

Rather than being listed as abandoned, the balanced budget pledge was described as "underway with challenges." It also said that that the anticipated result is that the budget will be balanced "over the long term" and that the government will maintain a downward deficit and debt-ratio track.

The details of Friday's report show that over the first six months of the fiscal year, revenues were up 4.9 per cent to $146.3-billion, while program expenses rose 4.2 per cent from the same period the year before.

Some of the main sources of increased spending included a rise in elderly benefits due to changing demographics and a 12.2 per cent increase in children's benefits resulting from the new Canada Child Benefit.

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