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Canada says its budget deficit has narrowed from record levels last April and May, when it was inflated by pandemic response programs.
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Canada's budget deficit in the first two months of the fiscal year was CAD23.8 billion, narrowing from the record CAD86.8 billion in the prior timeframe which reflected the government's roll-out of pandemic income support programs.
Revenue jumped 84% over April and May from the same period a year earlier to CAD59.6 billion, the federal finance department reported Friday. Program expenses fell 33% to CAD76.9 billion. The government's cash balance, built up during the heavy borrowing amid the crisis, declined to CAD59.7 billion from CAD148 billion.
Profits turned over to the government from the BOC's QE program helped lift the "other revenues" category by 264% or CAD6.4 billion.
Improved government finances come as Prime Minister Justin Trudeau is expected to call a snap election for this fall to turn his minority Liberal government into a majority that won't rely on opposition support for budget bills. While the Liberals have proposed adding to record deficits even as the pandemic lifts, sources tell MNI the Conservatives and other opposition parties would likely continue down a similar path of fiscal policy if they win the next election. (See: MNI INTERVIEW: Big-Spending Trudeau Seen Calling Snap Election)