UPDATE 1-Canada watchdog says structural deficit remains

* Budget officer sees 2013-14 deficit C$16.3 bln

* Government sees 2013-14 deficit C$8.5 bln

* Sees 2014-15 deficit C$12.3 bln, vs gov’t view C$1.8 bln

* Structural deficit remains – budget officer
(Adds details, background)

TORONTO, March 11 (BestGrowthStock) – Canada is facing bigger
deficits than the government is forecasting, the parliamentary
budget officer said on Thursday, adding he disagrees with
Ottawa’s more upbeat outlook on the economy.

Budget Officer Kevin Page also maintained his view that a
structural deficit remains despite announced savings measures
of C$17.6 billion ($17.1 billion) in last week’s federal
budget.

He said his forecasts for budget deficits are generally in
line with the federal government’s from 2009-10 to 2012-13.

But for 2013-14 and 2014-15, he sees deficits of C$16.3
billion and C$12.3 billion, respectively.

That compares with government forecasts for C$8.5 billion
and C$1.8 billion, respectively, as the deficit narrows over
the next five years from the estimated 2010-11 deficit of
C$49.2 billion. The government expects to move into surplus in
2015-16 as stimulus measures end and the economy recovers from
the recession and returns to growth.

Page’s assessment comes a week after the Conservative
government presented a stay-the-course budget that contained
few surprises. [ID:nN04196521]

The parliamentary budget officer’s mandate is to assess the
fiscal impact of federal policies and proposals. He reports to
Parliament, not just the government of the day.

Page said his estimate of the structural deficit “does not
mean that the government’s budget will not return to balance”
but that it would need some help.

Balance might come through the economy operating
significantly above its potential, through spending cuts or
through higher revenues, he said. Meantime, he estimates the
structural deficit will decline gradually to C$13.7 billion in
2014-15, including the savings measures in the latest budget.

The government defended its outlook on the economy on
Thursday. Prime Minister Stephen Harper adopted a more upbeat
tone than usual when discussing the economy, saying the nation
was recovering with a growing sense of optimism.
[ID:nN11222720]

Finance Minister Jim Flaherty’s office said its forecasts
were developed with leading economists across the country.

“Private sector economists widely agree that these are a
prudent basis for fiscal planning, even if Kevin Page doesn’t
agree. He’s in the minority,” said Chisholm Pothier, a
spokesman for Flaherty.

Page has previously warned that the country will face a
long-term deficit if the government fails to address economic
issues such as rising costs of an aging population and the
squeeze on federal revenues from tax cuts.

Stock Market

($1=$1.03 Canadian)
(Reporting by Ka Yan Ng; editing by Rob Wilson)

UPDATE 1-Canada watchdog says structural deficit remains