UPDATE 3-Canada's Flaherty says 'no doubt' budget balanced by 2015
By Louise Egan
OTTAWA Jan 27 (Reuters) - Canadian Finance Minister Jim Flaherty said on Monday there is "no doubt" the government's books will be balanced in 2015, but he cautioned against speculation the federal deficit will be eliminated sooner than that.
Flaherty later said he would present the government's 2014-15 budget to Parliament on Feb. 11 at 4 p.m. (2100 GMT).
While bullish about the possibility of a surplus before the 2015 federal election, Flaherty chose his words carefully when asked in a news conference if he could reach the goal a year earlier.
"We're being prudent. We know we're on track to balance in 2015-16 and ... we said we'd balance in the medium term, and we'll balance in the medium term, but we're going to be cautious in the meantime," he said.
"We have to make sure that we have a comfort level that we can respond to things that will happen. The world is what it is and things will happen," he said.
Flaherty spoke after a meeting with a group of private-sector economists whose forecasts the government uses as assumptions in its budget.
The Conservative government of Prime Minister Stephen Harper has long promised to balance the books.
With the U.S. recovery gaining strength and a slide in the Canadian dollar likely to boost exports, some economists said the prospects for Canada looked slightly better than they did last time they met with Flaherty in October.
"It's a bit more positive for Canada, which brings us closer to a balanced budget in the medium term," said Stefane Marion, chief economist at National Bank Financial. "Although let's not forget that in the rest of the world, it's a period of transition for financial markets. ... We're optimistic for Canada but not too, too optimistic."
Craig Wright, chief economist at Royal Bank of Canada, said he would not be shocked if the budget was balanced in 2014 if the government chose to do it.
In November, the government said it expected a deficit of C$17.9 billion ($16.19 billion), or about 1 percent of gross domestic product, in the 2013-14 fiscal year ending March 31.
It projected the shortfall would shrink to C$5.5 billion in 2014-15 and that there would be a surplus of C$3.7 billion in 2015-16. The move toward surplus would be more marked if the government's C$3 billion cushion for risk is excluded.
"THANK GOODNESS" FOR U.S. STRENGTH
Asked about the recent drop in the Canadian dollar, Flaherty said one factor affecting the loonie has been a relatively strong U.S. dollar.
"The American economy, thank goodness, is showing some strength," he said. "This is good for not only the United States and the American people but it's good for us and our country and Canadians because they are our biggest trading partner."
He said the government was not deliberately seeking to weaken the domestic currency to boost the attractiveness of exports.
"The currency, the Canadian dollar, is a market currency and it moves in response to market forces," he said.
Flaherty also dismissed a question about his health, a subject of growing speculation in Ottawa as colleagues and foes alike question behind the scenes how much longer he will stay in his job.
"No, it's not affecting my ability to do my job. Things are much better actually, thank you for asking," he said.
Flaherty revealed a year ago that he suffers from a rare skin disease called bullous pemphigoid, which creates painful blisters on the body. The condition is incurable but can be managed with powerful medication that has side effects such as weight gain and mood swings.
He has dramatically scaled down his public appearances and travel. As in his other recent appearances, Flaherty walked very gingerly on Monday, looked red-faced and lacked some of his former vitality. Finance officials say he is working just as hard as any other year on the budget.
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