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Federal finances were in surplus over the first quarter of the fiscal year, but Ottawa still expects to fall back into deficit as more results come in.

Finance Canada’s monthly tracking report of the federal bottom line showed a $4.3-billion surplus over the April to June period, which is up from a surplus of $83-million during the same three month period one year ago.

The first-quarter surplus is largely attributed to stronger revenues, which were up 8.6 per cent over the quarter. The increase outpaced the 2.3-per-cent growth in program expenses over that quarter.

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However, the report cautions that, like in previous years, expenses will be concentrated later in the fiscal year and that the results so far are “broadly in line” with the February budget.

Finance Minister Bill Morneau’s February budget had estimated the deficit would be $18.1-billion for 2018-19. That estimate included a $3-billion adjustment for risk.

Mr. Morneau’s fall fiscal update, which has not yet been scheduled, will be his next opportunity to revise the government’s forecasts. Fall updates often amend the size of the adjustment for risk based on the state of the economy.

The February budget did not set a timeline for erasing the deficit. Instead, the government is projecting that the size of annual deficits will decline gradually to $12.3-billion by 2022-23.

The size of the federal debt is also forecast to decline when measured as a percentage of GDP, from 30.4 per cent in 2017-18 to 28.4 per cent in 2022-23.

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