Sunday, September 21, 2014

Budget surplus could be bigger

OTTAWA—The federal budget surplus could be bigger than predicted in 2015, Finance minister Jim Flaherty said in an interview aired yesterday.
The assessment falls in line with projections from the Parliamentary Budget Office that came a month ago.

A Dec. 5 report from the PBO estimated the government could achieve a surplus of $4.6 billion by 2015, nearly $1 billion more than the estimate included in the November economic update.
In an interview with CTV’s “Question Period,” Flaherty said Canada could have a bigger surplus than projected if both the domestic and U.S. economies continue to gain strength.
“We could have a larger surplus than we anticipate, but we will have a surplus,” said Flaherty.
And should the economies of Canada and the U.S. improve through 2014, the minister said the squeeze will be on the Bank of Canada to raise interest rates.
“I think the pressure will be there because the Fed in the U.S. should stop printing money, and taper off as they say,” said Flaherty.
“And the OECD and the IMF have both said to Canada, we ought to let our interest rates go up a bit, so there will be some pressure there for that to happen.”
The PBO report, however, prefaced its surplus projections on expectations that the government would maintain EI premiums at current levels, that there would be no delays in selling off some public assets, and that spending restraints would continue.
And that is exactly what the government expects to do, said Flaherty.
The government has frozen basic EI premium rates at $1.88 for every $100 earned until 2016.
As well, it has announced the sell-off of some assets, including the Ridley Terminals and Dominion Coal Blocks in British Columbia and the government’s remaining stock of General Motors shares.
Flaherty also backed away from recent concerns over the levels of personal debt held by Canadians, telling CTV that moves to shore up mortgage rules have kept housing debt loads in check.
“The [housing] market is calming somewhat, so I’m less concerned than I was,” he remarked.
“And when you look at debt to net worth, as long as the housing market remains relatively strong, we don’t really have a debt issue.”

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