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Canada's budget deficit in the first four months of the fiscal year was CAD48.5 billion, narrowing from CAD149 billion in the corresponding period of 2020 that reflected massive pandemic income support measures. The July deficit shrank to CAD12 billion from CAD28.2 billion in the same month last year, the federal finance department said Friday.

Over the April to July period revenue climbed 60% from a year earlier and program expenses fell 27%. The government's cash balance, built up during the heavy borrowing amid the crisis, fell to CAD75.2 billion from CAD156 billion.

The Liberal Party proposed CAD78 billion of new spending over the next five fiscal years in a platform ahead of the Sept. 20 vote, and said new taxes on banks and the wealthy will help slim the deficit from CAD157 billion to CAD32.1 billion over that time. They said they would stick to a "fiscal anchor" sought by business groups and economists, pledging to reduce the debt-to-GDP ratio "over time" and slim the deficit every year. Debt-to-GDP ratio will decline from 48.5% to 46.5% over 5 years under the Liberal plan. The ratio was 31.3% before the pandemic.

Source: Department of Finance