The federal government's deficit for April to July is running at about half the size of what it was over the same four months last year.
From April through July, Ottawa posted a deficit of $3-billion, down from $5.9-billion during the same period in fiscal year 2011-12.
The numbers are contained in Finance Canada's monthly Fiscal Monitor, which was released Friday morning.
The numbers for July show a $1.1-billion deficit, which is down from $1.7-billion in July 2011.
The March 2012 budget projected the deficit would drop from $24.9-billion in 2011-12, to $21.1-billion in 2012-13, then $10.2-billion in 2013-14 and $1.3-billion in 2014-15.
Low inflation and low interest rates are helping Ottawa's bottom line. Those two factors have decreased the federal government's public debt charges by 7.5 per cent over the first four months of the year, saving about $800-million.
The fiscal monitor also provides a glimpse at the federal government's spending restraint efforts. The Parliamentary Budget Officer has been expressing frustration at Ottawa's refusal to provide detailed explanations of where federal departments are cutting in order to balance the budget by 2015-16.
Total program expenses grew 1.2 per cent over the first four months of the 2012-13 fiscal year. Elderly benefits are up 6 per cent, Employment Insurance benefits are down 1.4 per cent, health and social transfers to the provinces are up 5.1 per cent and transfers to cities and communities are up 18 per cent.
As for federal departments that transfer money to other groups or organizations, Aboriginal Affairs and Northern Development transfers are down 8.8 per cent, Agriculture transfers are up 16.7 per cent and human resources transfers are up 13.5 per cent.
Under federal program expenses, spending by Crown corporations is up 1.3 per cent, defence spending is down 0.1 per cent and spending by all other departments and agencies is down 1 per cent.
Overall, federal government spending is $86.37-billion over the first quarter, which is 0.1 per cent higher than the $86.26-billion spent during the same quarter last year.
With spending flat, a balanced budget will also depend on higher revenues.
Over the first four months of the year, money coming in to Ottawa is up 3.7 per cent. That's thanks in part to a 7.1 per cent jump in EI premiums due to an increase in the EI premium rate to $1.83 per $100 of insurable earnings. Personal income tax revenues are up 3.4 per cent and corporate income tax revenues are up four per cent this year, even though the federal corporate tax rate dropped on Jan. 1 from 16.5 per cent to 15 per cent. Revenues from the Goods and Services Tax are up 5.8 per cent.
Editor's note: an earlier version of this story incorrectly referred to a time period for the deficit.