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The Peace Tower is seen on Parliament Hill in Ottawa.SEAN KILPATRICK/The Canadian Press

The Conservative government is starting the year off in the red, posting a $1.1-billion deficit over the first two months of the current fiscal year.

Finance Canada released its Fiscal Monitor report for April and May Friday, which showed a $1.4-billion deficit for April and a $267-million surplus for May.

Those figures represent an improvement over the $2.7-billion deficit recorded during the first two months of the previous fiscal year in 2013-14.

The Feb. 11 federal budget projected a deficit of $2.9-billion in 2014-15. However that figure includes a $3-billion cushion for unforeseen events such as weaker-than-expected economic growth.

That means the government is effectively expecting a razor-thin surplus in 2014-15 should economic growth meet expectations.

The budget also forecasted a surplus of $6.4-billion in 2015-16, a figure that also includes a $3-billion downward revision known as an adjustment for risk.

The federal government's spending and revenue data will be closely watched by all federal political parties over the coming year. The size of future surpluses will influence the types of promises that can be made in the 2015 election year as parties weigh options such as new spending, tax cuts or debt reduction.

Finance Minister Joe Oliver received updated projections from private sector economists in June. Those updated figures for economic growth were generally in line with the assumptions in the Feb. 11 budget.

Mr. Oliver is expected to release an economic update in the fall that will revise the government's fiscal forecasts.

In a news release, the government states that it remains on track to balance the budget in 2015, meaning the 2015-16 fiscal year.

The Fiscal Monitor is released monthly except for the first month of the fiscal year. Figures for April and May are always released at the same time.

The Feb. 11 budget projected the 2013-14 fiscal year, which ended March 31, would finish with a $16.6-billion deficit. However the Fiscal Monitor report for March indicated a smaller deficit of $12.1-billion. The official deficit number for that year won't be known until the fall when the government releases the Public Accounts.