The Peace Tower, shown through the gates of Parliament Hi
The Liberal government ran a $7.8-billion deficit over the first half of the fiscal year, largely due to a 7-per-cent hike in program spending.
The figures are contained in the latest Fiscal Monitor tracking report released monthly by Finance Canada.
The report shows Ottawa ran a $2.4-billion deficit in September, compared with a $1.2-billion deficit in September, 2015.
The cumulative deficit over the first six months of the fiscal year stood at $7.8-billion, compared to a surplus of $1.6-billion over the same six-month period a year earlier.
The report does not project whether the spending and revenue trends are in line with the most recent forecasts from Finance Minister Bill Morneau.
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Monthly figures for the bottom line can fluctuate significantly.
Mr. Morneau's Nov. 1 fiscal update projected a $25.1-billion deficit for the current 2016-17 fiscal year. The deficit has been forecast to reach $27.8-billion the next year before shrinking gradually to $14.6-billion by 2021-22. Mr. Morneau has not provided a timeline for when the federal government will return to a balanced budget.
The government's fiscal plan is at odds with what the Liberals promised during last year's election campaign.
The party's 2015 campaign platform promised "modest short-term deficits of less than $10-billion in each of the next two fiscal years" and that after that "the deficit will decline and our investment plan will return Canada to a balanced budget in 2019."
The federal government posted a $1.9-billion surplus in 2014-15 after six straight years of deficits.
The final bottom line for 2015-16 was a small deficit of $987-million.
A closer look at Friday's Finance Canada report provides a more detailed look at spending trends.
Over the first six months of the year, program spending is up 7 per cent or $8.9-billion.
This is due to a 5.3-per-cent increase in elderly benefits due to demographics, a 7-per-cent increase in Employment Insurance benefits, and a 15.4-per-cent increase in children's benefits due to the new Canada Child Benefit.
Persistently low interest rates continue to help Ottawa's finances.
The government saved $1.4-billion, or 9.8 per cent, on public debt charges over the first six months of the fiscal year because of lower interest rates.
Bill Curry