By Paul Vieira


OTTAWA-Canada's budget deficit widened in November from a year ago, as a solid gain in tax revenue was partly offset by increases of over 30% in debt-financing charges and the payment of jobless benefits.

According to the Department of Finance's monthly fiscal monitor publication, Canada recorded in November a budget deficit of 4.01 billion Canadian dollars, or the equivalent of $2.98 billion, compared with a C$3.38 billion shortfall in the same year-ago month. For the April-to-November period, or with four months of data remaining in the 2023-24 fiscal year, Canada's budget deficit widened markedly to C$19.14 billion, compared with a C$3.55 billion deficit in the same year-ago period.

Canadian Finance Minister Chrystia Freeland has pledged to keep the budget deficit this fiscal year at C$40 billion, or 1.4% of the country's gross domestic product. Freeland has said Canada would also maintain a declining deficit-to-GDP ratio in the coming 2024-25 fiscal year, and ensure deficits are below 1% of GDP starting in 2026-27.

This week, the Business Council of Canada warned that Freeland and Prime Minister Justin Trudeau, who is struggling in public-opinion polls with an election over a year away, might need to cut annual spending at a more robust pace to hit its fiscal targets.

Bank of Canada Gov. Tiff Macklem said at a press conference this week that spending by governments across the country is expected to rise up to 2.5%, a pace that is "certainly not going to help us relieve inflationary pressures."

According to the November data, total revenue climbed 13.3% from a year ago, on hefty increases from personal-income, sales and payroll tax receipts. Government outlays on programs and benefits jumped 12.9% in the month, reflecting increases in payments to the elderly, which is a growing demographic with payments indexed to inflation, and a sharp jump, 31.2%, in the number of unemployed people collecting benefits.

Public-debt charges rose 35.1% from a year ago, due to higher interest rates. The Bank of Canada kept its benchmark interest rate unchanged this week at 5%, and said it would remain there until there is sustained evidence of a slowing in underlying inflation.


Write to Paul Vieira at paul.vieira@wsj.com


(END) Dow Jones Newswires

01-26-24 1115ET