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(MNI) Ottawa

Canada's budget deficit narrowed to CAD75.3 billion from April to January from CAD268 billion in the previous period as the pandemic rebound boosted tax revenue and curbed relief payouts ahead of a fiscal plan the government is due to release soon.

The finance department's Fiscal Monitor published Friday showed a deficit of CAD5.2 billion for January versus CAD20 billion a year earlier. Last month Canada reported the first monthly surplus since the pandemic took hold, evidence the economy may not need the stimulus Finance Minister Chrystia Freeland has signaled she will include in her next annual spending plan that normally comes before the fiscal year ends in March.

Parliament's budget officer has told MNI lawmakers have developed a higher tolerance for deficits and business groups have complained the stimulus is going too far and is targeted at consumption rather than long-term competitiveness. More stimulus would clash with a central bank headed for a series of rate hikes to curb the fastest inflation since 1991.

Freeland's last fiscal update projected a CAD145 billion deficit this year, or 5.8% of GDP, and it was expected to fade to CAD58 billion the next fiscal year.

MNI Ottawa Bureau | +1 613-314-9647 |
MNI Ottawa Bureau | +1 613-314-9647 |

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