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Canada's Tory government pegged a return to a balanced budget and its re-election hopes in 2015 on a strong rebound in the economy Thursday, after being dealt an unexpected slump in recent months.
"We have some tough times ahead," Finance Minister Jim Flaherty told the House of Commons, promising that a "consistent, steady hand" will get Canada back on track.
In previous budgets Flaherty slashed billions of dollars in spending, and now expects less pain going forward.
But he said frugality remains key to balancing the books, as well as closing tax loopholes "with strange names like 'Synthetic Dispositions' and 'Character Conversion Transactions'."
After coming to power in 2006, the Conservatives posted two back-to-back budget surpluses before the global recession hit and Canada has arguably weathered the crisis better than other Group of Seven nations.
Its debt-to-GDP ratio rose only slightly from last year to 33.8 percent in fiscal 2013-2014 despite tens of billions in stimulus spending. And it is on course to be the first among its G7 peers to return to a surplus.
However, "a recent moderation in economic growth" cut projected revenues by Can$1.2 billion (US$1.17 billion), according to the budget document, and there are "significant risks ahead."
Flaherty warned that the global economy remains "fragile" and Canada's biggest trading partners, including the European Union and the United States, are "among the worst affected."
"The US is burdened by massive debt and recovery is sluggish. As a result, the appetite for Canadian exports is unsteady," he explained.
Economists revised their growth forecasts to 1.6 percent this year, down nearly a full percentage point since the last budget, after key economic indicators in recent months pointed to slowing activity.
Flaherty, however, said he is optimistic the economy will rebound next year, reaching relative stellar growth of 2.5 percent. As such, his average outlook for the coming years is unchanged from his last fiscal update in November.
"Our government is committed to balancing the budget in 2015. Period," he said.
"In uncertain economic times, the most important contribution a government can make to bolster confidence and growth in a country is to maintain a sound fiscal position," he explained.
To make ends meet, Flaherty restricted spending growth, hoping government outlays will decline as a percentage of gross domestic product over time.
He unveiled a paltry Can$922 million (US$899 million) in new spending this year for items such as housing construction in the Arctic, as well as building new roads, bridges and public transit, and improving weather forecasting.
Monies were also earmarked to help Canadians get the right training to "significantly reduce a mismatch between employers and job seekers."
Mining exploration and fish farming, as well as manufacturers and small businesses, meanwhile, are to get a boost from tax credits or tax relief.
Import tariffs on baby clothes and ice skates, meanwhile, are to be lowered to bring Canadian retail prices in line with cheaper American offers.
At the same time, Flaherty said he would seek to trim costs by targeting public sector compensation to make it "affordable" and bring it in line with "other public and private sector employers" offers.
Unions will oppose this measure, after layoffs of 19,200 government staff, or 4.8 percent of the federal workforce, were announced last year.
As a result, Ottawa is predicted to post a Can$18.7 billion (US$18.2 billion) deficit for the year ending March 31, 2014, a smaller deficit the following year and a tiny surplus in fiscal 2015-2016 of Can$0.8 billion.