OTTAWA, Nov 13 (Reuters) - Canada pushed back the target to wipe out its federal budget deficit by a year on Tuesday, citing the impact of a weak global economy that has dampened commodity prices.
The finance department projected bigger-than-expected federal budget deficits for this year and the following three years. It now sees a return to a small surplus in 2016-17, a year later than previously planned.
Finance Minister Jim Flaherty, updating his March budget, said the fiscal shortfall in the current year would be C$26 billion ($26 billion), up from the previous forecast of C$21.1 billion.
Government revenues are seen as weaker than previously thought because prices for Canadian oil and other commodities have been lower that projected due to the sluggish global demand.
The outlook assumes the United States will avoid a set of tax hikes and spending cuts known as the “fiscal cliff”, but does factor in some U.S. fiscal tightening next year.
At about 1.4 percent of gross domestic product, Canada’s budget shortfall is tiny compared to the United States and some other major economies.
The government sees the deficit narrowing steadily to C$16.5 billion in 2013-14, C$8.6 billion in 2014-15 and C$1.8 billion in 2015-16.
Ottawa will post a surplus of C$1.7 billion in 2016-17, according to the projections. In his March budget, Flaherty said the deficit would be completely wiped out in 2015-16 by reducing government spending.
The federal debt-to-GDP ratio is expected to decline to 28.1 percent in 2017-18 from 33 percent in 2011-12.