The federal treasury incurred a narrower deficit of $1.7 billion in October as revenues grew faster than program spending.
The monthly deficit figures from the Department of Finance show that October's deficit was $400 million lower than in the same month a year earlier.
Revenues in the month increased by $1.6 billion as all tax revenue streams generated more income. Program spending grew by $1.1 billion.
Interest charges on the $661-billion net federal debt fell, thanks to lower interest rates.
The federal deficit in the first seven months of the current fiscal year is $10.6 billion. That's compared to a deficit of $13.9 billion over the same period a year ago.
Last month, Ottawa projected that its 2012-13 budget deficit would come in at $26.2 billion. That was an increase of $5.1 billion from the estimate in the March budget.
Finance Minister Jim Flaherty blamed a weakening global economy for much of the increase. That weakness will be persistent enough to push his goal of eliminating the deficit another year down the road.
Flaherty said the fiscal books aren't projected to be in a surplus position until 2016-17, a year later than he had originally predicted.