Prime Minister Stephen Harper, right, participates in a roundtable discussion with Transport Minister John Baird in Gatineau, Quebec on Thursday. (Sean Kilpatrick/Canadian Press)

Prime Minister Stephen Harper is suggesting the federal deficit, pegged at $85 billion over the next five years, could get bigger as the government battles the recession.

Harper told Quebec mayors in Gatineau on Thursday that negative balance sheets will grow "as large as they have to" while the economy struggles to recover.

The remarks followed forecasts from public- and private-sector analysts warning that the deficit will balloon, because the economy and tax revenues have plunged more than expected.

The prime minister now is dropping hints that figures from the federal Finance Department may get worse.

He said Canada can afford to run temporary deficits because of its relative fiscal strength compared with other countries.

"Our deficits will be large, but they will be temporary," Harper said. "In fact, in the short term they will be as large as they have to be, to help us weather the recession.

"As a country, we can afford it — but only if these deficits are temporary and our stimulus spending ends when the recession ends."

Canada envied by other countries

He said Canada's debt-to-GDP ratio is the envy of developed countries, and that the country can afford a flurry of spending.

The Conservative government has projected a $34-billion deficit for 2009-10 and an $85-billion shortfall by 2013.

The parliamentary budget officer, Kevin Page, has already warned that the Conservative forecast is rosy, with the fiscal hole $9 billion larger than the government forecast.

The Toronto-Dominion Bank, one of the country's leading private-sector authorities on the budgetary implications of economic shifts, has gone even further than Page.

The bank says the deterioration in conditions since the January budget likely means the deficit could balloon an additional $17.5 billion during the first two years.

Although the budget does not give a figure for real GDP, the consensus forecast at the beginning of the year had been for a relatively modest 0.8 per cent decline in 2009.

The Bank of Canada now forecasts the economy will tumble a full three per cent.