After first quarter, feds on track to meet $28.5B deficit prediction: report

That means the balance-sheet ink is set to start turning red over the coming months.

The document noted that while the first quarter numbers provided limited detail for the whole fiscal year, it insisted they’re consistent with the deficit prediction in Ottawa’s March budget.

Government revenues were up $3.5 billion or 4.9%, compared with the same three-month period last year. The increase includes a $4-billion or 7% increase in total tax revenues.

The higher revenues were partly offset by an increase in total expenses of 3.3% or $2.4 billion. That included a 9.1% increase in transfers to individuals, such as child- and elderly-benefit payments.

Over the same period, public debt charges fell 4.2% or $265 million.

In June alone, the government posted a $16 million surplus compared with a year earlier after revenues rose $1.2 billion or 5.2% and total expenses increased $109 million or 0.4%.

The Finance Department report was released with indicators showing the economy has been building momentum since the start of 2017.

The improvements prompted the Bank of Canada to hike its key interest rate last month and expectations are high it will introduce another increase this fall.

Earlier this month, the parliamentary budget officer predicted the government would run a shortfall this year of $24.8 billion.

The Trudeau government has projected double-digit deficits until at least 2021-22 in order to finance initiatives it’s banking on to lift the economy, such as major infrastructure projects and enhanced child benefits.

The Liberals’ 2015 election platform promised annual deficits of no more than $10 billion over the next couple of years and to eliminate the deficit by 2019-20.

They posted a $21.85-billion shortfall last year and have yet to provide a timeline for when the budget will be balanced.

The Conservatives have repeatedly attacked the Liberals over their deficit-spending plan.