It’s no secret that Prime Minister Stephen Harper wants to get the country’s books back in balance by the year 2015 – the year when he hits the campaign trail once again. But with the latest numbers coming in, and showing that Canada’s deficit was almost $1 billion more than it was compared to a year ago, it’s looking as though the Conservatives may have a hard time carrying out that agenda.
The fiscal year for this year began on April 1, and since that time the Conservatives have posted a $2.7 billion deficit – much more than the $1.8 billion deficit they posted during the same two months (April and May) of last year. The government is still projecting an $18.7 billion negative balance, but this latest news definitely sets them back slightly in reaching that goal.
While critics and members of opposing parties are surely going to take this news and run with it as proof that the wrong people are in power, economists agree that it’s far too early to say that the Conservatives have dropped the ball.
“The year-to-date deficit figures do not give us much to hang our hats on when it comes to annual deficit forecasting,” says Sonya Gulati, TD Bank economist. “In addition, we do not have a sufficient amount of economic indicators for the second quarter to gauge whether 2013 government planning assumptions remain on point.”
There’s also the fact that the last fiscal year ended with an approximate $25.9 billion shortfall. That was the first time since the recession though, that the government hadn’t made significant moves with the deficit.
Most of the shortfall in these latest numbers came from the month of May, which saw a $2.4 billion shortfall to the deficit; April had only a 0.3 billion.
The reason for the ballooning deficit during these two months was simple – revenues fell while expenses increased. Up from the $557 million they were at last year, revenues climbed to $41.8 billion thanks to personal and corporate taxes. Spending though was very high, with program spending rising to $39.2 billion from $1.35 billion; and servicing that debt rose to $5.4 billion from the $106 million that it was last year during the same time frame.
During the 2013-2014 fiscal year, the Harper government would like to shrink the deficit by $18.7 billion this year; and then by another $6.6 billion next year before the election. While no one can say that they’ve gone wildly off course in their plans, this news certainly isn’t going to make it any easier for them.