Canada's Finance Minister Projects $3 Billion Deficit

Slumping oil prices mean Canada is more than likely to finish the fiscal year with a deficit.

“The simple truth is that the economy hasn’t performed as well as expected in the last budget,” said Canadian Finance Minister Bill Morneau.

The finance minister projects the nation will end be in the red by C$3 billion at the end of fiscal 2015. Newly elected Prime Minister Justin Trudeau championed a stimulus package and deficit spending to jumpstart the sagging economy during his campaign. Morneau’s financial projections for 2016 and 2017 are bleaker than initially thought.

How the situation will affect Trudeau’s economic policy remains to be seen. Some experts believe there’s even a bit political posturing at play.

“Incoming governments typically start by announcing the fiscal outlook left by their predecessor was worse than they had been led to believe,” said Avery Shenfeld, chief economist at Canadian Imperial Bank of Commerce.

Only the United Arab Emirates and Venezuela have large supplies of crude oil than Canada, which has been battered by the decline in oil prices worldwide. Canada’s finance department lowered estimates of projected growth for its gross domestic product to 1.2 percent in 2015 and 2 percent in 2016. The Canadian dollar is worth roughly 75 cents to the United States' dollar.