The federal government ran a deficit of less than $1 billion in February, boosting the possibility that the deficit for the latest fiscal year will come in far smaller than Finance Minister Jim Flaherty predicted in March.Finance Minister Jim Flaherty projected the 2009-10 budget deficit would come in at $53.8 billion when he delivered his budget speech in the House of Commons on March 4. (Adrian Wyld/Canadian Press)

February's budget shortfall was $902 million, federal figures released Friday showed. Revenues in the month rose by $800 million as a rebounding economy led to higher corporate income tax receipts.

The February figures bring the red ink in the first 11 months of the 2009-10 fiscal year to $40.5 billion — suggesting that once the figures for March come in next month, the deficit for the whole fiscal year will end up well short of the $53.8-billion estimate from the budget Flaherty presented on March 4.

The Finance Department said revenues in the first 11 months of the fiscal year were down $16.9 billion year-over-year — mainly because of lower personal and corporate income tax revenues as the recession took hold.

Expenses rose $26.4 billion as transfers to individuals and other levels of government climbed. Almost $18 billion of the 11-month deficit of $40.5 billion was due to stimulus spending and tax cuts, enhanced EI benefits and support for the automotive industry, the government said.

Flaherty's March budget predicted the deficit for the current 2010-11 fiscal year would be $49.2 billion, then would shrink each year through 2014-15, when the Finance Department projected a deficit of $1.8 billion.

At that point, the accumulated federal debt would have swollen to more than $622 billion.