OTTAWA — The federal budget watchdog says the Harper government is closer to eliminating the deficit than even its own rosy projections issued last month suggest.The parliamentary budget office says in a new assessment of the government’s fiscal position that the surplus in 2015 will most likely hit $4.6 billion — almost $1 billion more than the official estimate.[np_storybar title=”Highlights of Ottawa’s economic update” link=””] Some of the specific projections Finance Minister Jim Flaherty delivered Tuesday in the fall economic update:Budget surplus of $3.7 billion in 2015-16 — $3-billion less than projected in March — and $5 billion in 2016-17. Federal deficit to fall to $17.9 billion for 2013-14, compared with $18.9 billion the previous year and $55.6 billion in 2009-10. Government expects widespread spring flooding in Alberta to cost $2.8 billion in 2013-14, on top of $60 million in assistance for rail disaster in Lac-Megantic, Que. Sale of 30 million shares in General Motors to net $700 million for 2013-14; other expected asset sales include B.C. bulk coal terminal Ridley Terminals, the rest of the government’s GM shares and the Dominion Coal Blocks lands in B.C., generating $500 million in 2014-15 and $1.5 billion in 2015-16. Real GDP growth to fall to 2.4% in 2014, down from 2.5% in federal budget. Nominal GDP growth of three% in 2013, down from 3.3%, and 4.2% in 2014, down from 4.7%. Spending freeze in federal government departments to save $1.65 billion over 2014-15 and 2015-16. Canadian Press [/np_storybar]Meanwhile, the office predicts the deficit in next year’s budget could be as low as $3.5 billion, about $2 billion better than Finance Minister Jim Flaherty announced in last month’s fall economic update.Given that Flaherty has included a $3-billion cushion for risk in all his assumptions, the PBO’s analysis suggests that it is theoretically possible for the government to bring in a balanced budget as early as next spring.The improved fiscal track occurs even though the office forecasts lower economic growth over the next few years.Despite the slower growth, the office says it believes Ottawa will save more than it is saying from a recently announced two-year departmental spending freeze and continuation of the recent practice of letting approved spending lapse.The freeze and projected lapses will net Ottawa about $2.7 billion in the critical 2015-16 fiscal year, the report says, more than twice what the government has budgeted.In addition keeping employment insurance premiums higher than necessary to fund the account in 2015 and 2016 will bring in about $4.2 billion.But the watchdog also cautions that there are plenty of risks to the projections, including that the economy will not continue to expand as expected and that the government’s savings won’t materialize.Still, the latest report gives a 65% probability that Ottawa will hit its target for a balanced budget in 2015, the year the Harper Conservatives will face the voters in a general election.

Jim Flaherty will balance the books sooner than he thinks says Ottawas
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