OTTAWA - The federal government is once again awash in cash thanks to a much stronger than expected economy.
The budget surplus for fiscal 2007-08 will be much higher than projected, says the Finance Department. In March, Finance Minister Jim Flaherty estimated the surplus would reach $3 billion.
However, the surplus had already doubled that in the three-month period ending in June.
"For the first three months of the 2007-08 fiscal year, the budgetary surplus is estimated at $6.4 billion," the department said in a statement.
That's up $0.5 billion from the $5.9 billion surplus reported in the same period last year.
And it comes despite a 7.6 per cent jump in spending in the first quarter on defence, increased transfers to the provinces and territories, and government operating expenses.
The Finance Department has also dramatically revised upward its predictions for economic growth this year.
"Private sector forecasters have revised up their outlook for nominal gross domestic product (GDP) growth in 2007 to 5.2 per cent from 3.9 per cent at the time of Budget 2007," the department said.
"The year-to-date financial results also suggest that revenues will be higher than had been anticipated in March."
In June, there was a budgetary surplus of $2.8 billion, up $0.6 billion from the same month in 2006.
Budgetary revenues were up $1.5 billion, or 7.6 per cent. Program expenses were also up, by $0.9 billion, or 6.4 per cent.
The government cites transfers to other levels of government and increased departmental operating expenses for the increased spending.
Interest costs on the federal debt were lower by $47 million.
