Federal books in surplus territory again in February as spending shrinks

OTTAWA – The federal government’s books were in surplus again in February, another sign that Ottawa is on track to eliminate the deficit.

According to the latest accounting from the Department of Finance, Ottawa recorded a surplus of $1.5 billion in February, compared to a deficit of $600 million a year earlier.

Revenues in February grew 5.2 per cent, while program spending shrank 3.6 per cent. It’s the second month in a row Ottawa has logged a surplus.

For the year to date, the Finance Department report shows the deficit is half the size it was a year ago.

The deficit for the first 11 months of the 2011-2012 fiscal year stood at $14.5 billion, compared to a $28.3-billion deficit for the same period a year earlier.

The rapidly shrinking deficit means that even after year-end adjustments, Ottawa is well on its way to meeting its target of a $24.9-billion deficit for 2011-2012.

The federal books have improved mainly because revenue — especially from personal and corporate income taxes — was on the rise over the past 11 months.

At the same time, Ottawa cut spending. Program expenses for the first 11 months of the year were down $4 billion, or 1.9 per cent, from the same period in the 2010-2011 fiscal year.

That’s because employment insurance benefit payments slid by $2 billion, or 11.2 per cent, and spending on infrastructure has dwindled as the government wound down its stimulus plan.