Canada's deficit for the fiscal year has reached $39.4 billion, government figures say, highlighting a difficult position for Finance Minister Jim Flaherty as he prepares the March 4 budget.
Lower tax revenues, an aging population and higher program expenses are behind the deficit numbers, according to the Department of Finance's monthly Fiscal Monitor report, which was released Friday.
Nine months into the fiscal year, the deficit numbers are in line with Flaherty's prediction of a $56 billion deficit for the year.
However, Flaherty's initial budget for 2009-2010 called for a deficit of $33.7 billion, and $29 billion for the following year.
The April through December 2009 deficit is in contrast to a surplus of $0.4 billion, over the same period in the previous fiscal year.
Government revenues were down $19.4 billion, a decline of 11.2 per cent and program expenses were up $22 billion, a rise of 14.8 per cent.
The fiscal update says more than $16 billion of the nearly $40 billion deficit can be attributed to Canada's Economic Action Plan.
Last week, Parliamentary Budget Officer Kevin Page said due to federal government tax cuts and an aging population, there is a structural deficit built into the budget.
Page has said taxes will need to be raised to balance the budget, but Prime Minister Stephen Harper has pledged not to do so.
The fiscal update highlights the reduction in personal tax income for the government, with a decline of 7.4 per cent in December over the previous year.
One small bit of good news in the report is that debt charges were lower by $1.7 billion compared to the previous fiscal year because of lower interest rates.
