OTTAWA - The federal government shrank its deficit for October to $1.7 billion compared with a shortfall of $2.1 billion a year ago.
The decrease came as revenue for the month was up eight per cent or $1.6 billion to $20.89 billion, while program spending was up 6.1 per cent or $1.1 billion to $20.03 billion.
Public debt charges were down 1.5 per cent or about $38 million to $2.54 billion.
TD economist Francis Fong said the results were "mostly consistent" with the Ottawa's fall fiscal update that estimated that the budget would be balanced by 2016-17.
"The seven-month accumulated deficit does appear slightly out of sync with the annual 2012-13 estimate — however, this could either be due to timing issues on either the revenue or expenditure side that could impact the second half of the year or result in some adjustment at year end," Fong wrote in a note.
For the first seven months of the government's fiscal year, the deficit is $10.6 billion compared with a deficit of $13.9 billion at the same point last year.
Ottawa projected in its fall fiscal update last month that the deficit will be $26 billion this fiscal year, which ends in March, compared with earlier expectations of $21.1 billion. Last year's deficit was $26.2 billion.
The deficit is also now projected to hit $16.5 billion next year, compared with the budget estimate of $10.2 billion, and $8.6 billion in 2014-15, as opposed to $1.3 billion.
According to the government's fiscal monitor on Friday, personal income tax revenues were up $400 million or 4.4 per cent, while corporate income tax revenues were up $800 million, or 38.1 per cent, due to the timing of payments this year compared with a year ago.
On the spending side, benefits to the elderly increased by $200 million or 5.5 per cent, while EI benefit payments decreased by $300 million or 18.5 per cent. Children's benefits, including the Canada Child Tax Benefit and the Universal Child Care Benefit, increased by $17 million.
Major transfers to other levels of government increased by $200 million or 4.1 per cent, while direct program spending was up $1.0 billion, or 11.9 per cent, from a year ago.