New Finance Minister John Manley said Canada's budget surplus is expected to be $6 billion for the recently completed fiscal year.

As required by law, the surplus money will be used to further pay down the debt. Manley's surplus estimate came in an appearance in front of the House of Commons finance committee. It was his first update on the state of the country's finances since assuming the finance portfolio early this month.

The expected $6 billion surplus for the fiscal year ending March 31 is larger than what had been forecast in last December's budget. Back then – just three months after the Sept. 11 attacks – former finance minister Paul Martin delivered a budget that predicted no actual surplus at all, just a $1.5 billion contingency reserve.

Finance Minister John Manley expects a $6 billion surplus
Finance Minister John Manley expects a $6 billion surplus

But after contracting by an annualized rate of negative 0.5 per cent in the third quarter of 2001, the Canadian economy rebounded much faster and stronger than expected. The annualized growth of 2.9 per for the last three months of last year was surpassed by booming growth for the first quarter of this year – when growth was 6 per cent.

"Canada has successfully emerged from a time of global economic volatility and uncertainty," Manley said Wednesday.

The surplus figure still needs to be confirmed while year-end adjustments are made in the next few months. But that tinkering will not change the fact that the federal government will have run surpluses for five straight years.

Stronger-than-expected economic growth so far this year will also mean that the country's finances for the 2002-2003 fiscal year will be better than initially forecast in last year's budget, Manley added.

However, he said it was premature to speculate on how much better the country's books will be this year.

He characterized some figures ($10 billion) that have been tossed around in media reports as "highly speculative".

During his presentation to the committee, Manley boasted that both the International Monetary Fund and the Organization for Economic Cooperation and Development predict Canada will lead the G-7 in economic growth both this year and next.

Manley also said that Canada's debt-to-gross domestic product ratio has fallen from 71 per cent to 50 per cent in the last year, thanks to the strong economy. "Further declines are expected," Manley added.