Canada announces 13.2 bln cad surplus, higher than forecast

Canadian Finance Minister Jim Flaherty announced a higher than expected surplus of 13.2 bln cad due to cuts and lower than expected expenses. Canada's Conservative government "is trimming the fat and refocusing spending on the priorities of Canadians," he told reporters, explaining that "for the first time in nine years, program spending has actually declined." The surplus, about 5.2 bln cad higher than forecast in Flaherty's first budget in February, was highlighted in the government's 2005/2006 annual financial report released yesterday. Government revenues increased, almost exactly as predicted, by 10.3 bln cad or 4.8 pct, Flaherty said, reflecting strong growth in the Canadian economy, and despite tax cuts in 2005. But expenses and federal debt charges were down 1.5 bln cad or about 0.7 pct to 209 bln cad from the previous statement. Treasury Board President John Baird said about 1 bln cad in savings this year were due to the streamlining or elimination of programs, such as funding for medical marijuana research. Unused funds from several programs that had already achieved their objectives also flowed back into government coffers, he said, including the relocation of federal tourism offices from Ottawa to Vancouver on Canada's picturesque Pacific coast. Baird predicted another 1 bln cad in similar savings next year. The surplus funds will go to paying down Canada's debt, now 481.5 bln cad, marking "one of the largest debt reductions in our country's history," Flaherty said. The federal debt as a percentage of gross domestic product is now at its lowest level in 24 years, he said. The ratio is 35.1 pct, down sharply from its peak of 68.4 pct in 1995-1996. "The country's debt load is set to shrink further in years ahead," he added.