Ottawa posts $2.3 billion deficit of August, according to monthly fiscal monitor

OTTAWA – The federal government saw its surplus for this fiscal year cut nearly in half as it ran a $2.3-billion deficit in August, according to the Finance Department’s monthly fiscal monitor.

The result for August compared with a deficit of roughly $300 million in the same month last year.

Ottawa’s surplus for the April-to-August period stood at $2.8 billion compared with a deficit of $1.1 billion for the same five-month period last year.

The update to the government’s fiscal position comes as Liberal Leader Justin Trudeau prepares to be sworn in as prime minister next week.

The Liberals won the federal election earlier this month with a campaign promise to run deficits to fund billions in infrastructure spending.

The spring federal budget had forecast a surplus of $1.4 billion for the current fiscal year, but the economy has grown at a slower pace than expected, raising concerns Ottawa will fall short of that mark.

For August, government revenue was up $2.8 billion, or 14.6 per cent, from a year ago, while program spending was up by $4.4 billion, or 24.8 per cent from the same month last year.

The increase in spending was due mainly to updated estimates related to pension and other employee and veteran benefit costs.

Public debt charges for August increased by $500 million, or 23.5 per cent, from a year ago due in part to charges from a bond buyback.