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The Globe and Mail

Federal deficit reaches $13-billion for the year so far

Parliament Hill in Ottawa.

Dave Chan/The Globe and Mail

The federal government ran a deficit of $600-million in December, bringing the total for the first nine months of the current financial year to $13-billion.

The December deficit was $100-million higher than in the final month of 2011 but the nine-month total was $3.1-billion lower thanks to savings in previous months of the current financial year.

In its November fiscal update, the government said it expected to post a $26-billion deficit for the year, up $5-billion from the March budget forecast.

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TD Bank economist Jonathan Bendiner said Friday the nine-month results suggest the government could be slightly ahead of its target.

"However, given the lack of momentum currently seen in the Canadian economy over recent months, there may be room for the deficit to grow in the final stretch of fiscal year 2012-13," Bendiner wrote in a report.

"There have also been signals that the depressed oil price environment faced by Canadian oil producers will have an impact on fiscal coffers."

Earlier this month, Finance Minister Jim Flaherty cautioned that government revenues were being hurt by lower-than-expected commodity prices, particularly Alberta crude, which is being sold as a discount to world prices due in part to limits in pipeline capacity.

The December deficit grew as program expenses increased by $700-million from a year earlier to $20.3-billion for the month.

Payments for benefits for the elderly increased by $200-million, while employment insurance benefit payments increased by $200-million. Children's benefits increased by $15-million.

Meanwhile, major transfers to other levels of government increased by $600-million, while direct program spending was down $200-million.

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The federal government's revenue grew by $600-million to $22.2-billion, with personal income tax revenues up $1-billion and corporate income tax revenues were down $400-million.

Non-resident income tax revenues were down $200-million, while excise taxes and duties were up $400-million, due to an increase in GST revenue.

EI premium revenues were up $44-million and other revenues were down $200-million.

Public debt charges dropped by about $100-million.

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