The federal government ran a smaller budget surplus in December as revenues fell 8%, the Department of Finance said Friday.

The budgetary surplus was $0.2 billion in December 2008, compared to a surplus of $1.8 billion in December 2007.

Budgetary revenues were down $1.7 billion, or 8.1%, from the year earlier period reflecting lower corporate income tax and goods and services tax revenues, Finance said.

Program expenses increased by $0.3 billion, or 1.7%, compared to December 2007, largely reflecting higher transfer payments. Public debt charges decreased by $0.4 billion compared to December 2007.

For the first nine months of the 2008–09 fiscal year, there was a budgetary surplus of $0.5 billion, down $8 billion from the $8.4 billion surplus reported in the same period of 2007–08.

Budgetary revenues decreased by $1.2 billion, or 0.7%, primarily reflecting declines in corporate income tax and GST revenues, partially offset by growth in personal income tax and other revenues, Finance said.

Program expenses were up $8 billion, or 5.7%, due to higher transfer payments and operating expenses of departments and agencies. Public debt charges were down $1.2 billion on a year-over-year basis, reflecting a lower average effective interest rate on the stock of interest-bearing debt.