BUDGET DEFICIT

Analysis of Canada's Conservative Government Policy on Deficit

Analysis of Canada's Conservative Government Policy on Deficit

Introduction

The study is related to the government policy of Canada on deficit which took place in 2011 that is from April to November 2011 where the budgetary deficit is $ 17.3 billion. Moreover, the budget deficit only in November 2011 is $ 1.9 billion. It is important for Canada to make effective polices and strategies to cover the budgetary deficit of Canada as it will help in making the budget towards the surplus.

Discussion

The budget deficit is the situation in which the state revenues excluding loan repayments are less than its expenditure excluding debt over a year which is a negative balance. The budget deficit differs from the deficit because it does not include the balance of revenue and expenditure of local authorities and social security (Santow, 2009). It is equivalent to the need for state funding and results in the amount of new debt that must contract during the year. Finance laws may provide for a deficit and allow the state to borrow up to that need funding. Canada has a budget deficit continuously for over last 2 years, inflating its outstanding debt that is total borrowings.

According to economists, the budget deficit may play different roles. It can stimulate growth and employment in an economy in recession. However, the Liberals insist on the adverse effects of increased public debt. The first 11 months of 2010-2011 yield budget deficit $ 28.3 billion, compared to a deficit of $ 40.5 billion for the same period a year ago. At budget time, on March 22, the Harper government had projected a deficit of $ 40.5 billion for fiscal year 2010 to 2011 ended on March 31. The portrait of the first 11 months suggests that the deficit will be lower than anticipated. Close to half the deficit in the first 11 months of the year is attributable to actions taken under the Economic Action Plan of Canada, which includes tax cuts, measures related to employment insurance and financing of infrastructure projects. The Harper government has promised to eliminate the deficit a year earlier than planned, in 2014-2015. In November 2011, Canada faced budgetary deficit of $ 1.9 billion as compared to budgetary deficit of $ 4.5 billion in November 2010 in which the revenues of the country decreased by $ 48 million, showing the reflecting lower duties and excise taxes and other revenues which were largely offset by higher income tax revenues. Public debt charges decreased by $41 million, program expenses were down $ 2.5 billion in part showing the wind down of economic stimulus funding of country.

The concept of fiscal deficit, budget deficit or public deficit describes the situation where the costs incurred by the State or other public entities in a given period, usually one year, exceed their income (Clemmitt, 2005).

When talking about budget deficit is referring to the deficit of all the government of a country, such as whether we refer to the Spanish case, ...