Canada ran a wider budget deficit in August than the same year-ago month as expenses surged on tax breaks for households with children and a ramp-up in the payout of jobless benefits.

The pickup in Canada’s budget deficit reflects a weak economy, and Liberal government efforts to pump up growth through expansionary fiscal policy.

Public-finance data for the first five months of the 2016-17 fiscal year indicate Canada is running a deficit of C$ 5.45 billion, compared to a surplus of C$2.82 in the comparable year-ago period. In the 2016 budget plan, Canada’s Liberal government forecast a deficit in the current fiscal year of C$29.4 billion.

Canadian Finance Minister Bill Morneau is set to unveil the government’s economic and fiscal update on Tuesday, and market watchers expect the deficit forecast to widen amid a downgrade in economic activity. Indicators suggest the Canadian economy remains on a slow-growth track, and is still in the early stages of a recovery after a downturn fueled by the commodity-price swoon.

Source: http://www.nasdaq.com/article/canada-budget-deficit-widens-in-august-from-year-ago-20161028-00558