The federal government ran a deficit of $25.5-billion over the first 11 months of the fiscal year that ended in March, the Department of Finance reported Friday, a trend that suggests Tuesday\u2019s fiscal update could show a smaller deficit than Ottawa projected in the November budget.<\/p>\n
Finance Minister Fran\u00e7ois-Philippe Champagne\u2019s fall budget had projected a deficit of $78.3-billion<\/a> for the 2025-26 fiscal year.<\/p>\n The minister will release a spring economic statement Tuesday.<\/p>\n The government typically posts large one-month deficits in March, the final month of the fiscal year.<\/p>\n For instance, last March Ottawa posted a $23.9-billion deficit. However, even a repeat of a deficit of that size for March, 2026, would mean Ottawa is well within its budgeted deficit forecast.<\/p>\n Ahead of the spring economic statement, some private-sector economists have said they expect Ottawa will show an improved bottom line compared to what was expected at the time of the budget. The question they raise is whether the Liberals will use that room for new spending.<\/p>\n C.D. Howe Institute urges Ottawa to curb deficit spending in upcoming fiscal update<\/a><\/p>\n Rebekah Young, Scotiabank\u2019s vice-president of economic policy, who authored a detailed analysis<\/a> of federal finances earlier this week, said in an interview Friday that while federal revenues are higher than projected in November, she expects new and recent spending announcements will use up most of that room. <\/p>\n \u201cThey\u2019ll land closer to $78-billion than they will to the $25-billion,\u201d Ms. Young said regarding her expectations for the deficit figure Mr. Champagne will announce Tuesday. \u201cI suspect March had a bit of March Madness and stuff went out the door.\u201d<\/p>\n While the underlying economic numbers have improved since November, Ms. Young said she expects the government will want to be cautious in its forecasting in light of the negotiations taking place over Canada-U.S. trade and the conflict in the Middle East.<\/p>\n \u201cThere\u2019s so much uncertainty that I suspect they will be careful about booking too much of a fiscal windfall,\u201d she said.<\/p>\n