Low oil to keep Ottawa into deficit: TD

WATCH: The prime minister got a big reality check on his long-standing promise to deliver a budget surplus, as a leading economist says that’s not likely because of falling oil prices. Tom Clark discusses what the means for Stephen Harper heading towards and election.

OTTAWA – One of Canada’s biggest banks says sliding oil prices could turn the federal government’s promised 2015-16 surplus into a deficit.

A report by TD Bank is projecting Ottawa to run a $2.3-billion shortfall next fiscal year rather than the $1.6-billion surplus predicted by the government in November – before oil prices fell further.

The bank also says the government’s $4.3-billion surplus projection for 2016-17 is on track to become a $600-million deficit unless new revenue-generating or cost-cutting measures are introduced.

READ MORE: Oil dips below $45 as OPEC signals no cuts

TD, however, says the deficit estimates are still smaller than the government’s $3-billion reserve set aside for contingencies – which would help keep Ottawa in surplus territory.

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Prime Minister Stephen Harper has promised his government will balance the books in 2015-16 despite tumbling oil prices.

The Bank of Canada is scheduled to address the economic impact of falling oil prices in a speech by deputy governor Timothy Lane.

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