(Recasts with long-term projections)
OTTAWA, Dec 22 (Reuters) - Canada will run a budget surplus by 2045, the finance department projected on Friday, suggesting the Liberal government will run deficits well beyond the timeline it promised during its successful election campaign.
In its updated long-term fiscal projections, the government said it sees deficits until the fiscal year 2045-46, when it sees a surplus of C$10.9 billion ($8.5 billion).
The Finance Department cautioned that the long-term numbers should not to be interpreted as forecasts and are “subject to a fair degree of uncertainty.”
The government also sees the economy growing at an average annual rate of 2 percent from 2017 to 2022 and 1.7 percent over 2023 to 2035.
Running deficits in order to boost the weak economy was a significant part of Prime Minister Justin Trudeau’s election campaign in 2015.
At the time, Trudeau promised to run modest deficits over three years and to balance the books by fiscal 2019-20, but the most recent budget update forecasts deficits until 2022-23, the end of its forecast horizon.
In its October fiscal update, the government forecast a deficit of C$19.9 billion in the current 2017-18 fiscal year, smaller than it had previously anticipated.
Separately, the finance department said Canada’s budget deficit narrowed in October compared to the previous year as revenue from both personal and corporate taxes increased.
The government posted a deficit of C$349 million ($273 million) in October, compared to a deficit of C$1.53 billion in October 2016.
Revenue was up 4 percent as the government took in more money from personal and corporate income taxes. At the same time, program expenses declined 0.9 percent as payments to unemployed workers fell.
For the fiscal year so far that began in April, the government ran a deficit of C$6.28 billion, down from a C$9.34 billion deficit in the same timeframe last year.
$1 = 1.2769 Canadian dollars Reporting by Leah Schnurr; Editing by Cynthia Osterman