Canada budget deficit widens in September; BoC forecasts 1.1 pct growth in 2016

The budget deficit in Canada widened during the month of September, following a decline in tax receipts during the period, compared to a year earlier.  Also, the Bank of Canada expected the economy to expand by 1.1 percent this year, amid an environment of timid growth prospects and disappointing non-energy exports.

Canada’s budget deficit in September, came in at CAD2.37 billion, almost double the CAD1.25 billion deficit witnessed same period a year ago, data released by the country’s Department of Finance showed Friday. Further, Finance Minister Morneau said that the country’s fiscal deficit for this fiscal would come in a little lesser than previously forecasted.

In addition, government’s revenue fell 1.5 percent to CAD21.66 billion in September, on declines in receipts from corporate and excise taxes, data showed, marking the third straight month-over-month drop in revenue. Further, for the April-to-September period, revenue decreased 1.3 percent to CAD139.45 billion.

On the expense side, outlays related to government programs climbed 4.8 percent in September to CAD24.02 billion, and 5.4 percent over the six-month period, reflecting a jump in benefits paid out to households with children. Offsetting the increased costs was a drop of 11.3 percent in public-debt charges, reflecting the low-rate environment.

Meanwhile, the USD/CAD has formed a bullish candle at 1.34, up 0.32 percent and recovering Friday’s losses, while at 4:00GMT, the FxWirePro's Hourly CAD Strength Index remained slightly bearish at -81.40 (lower than the -75 benchmark for bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex