Finance Minister Jim Flaherty and Prime Minister Stephen Harper enter the House of Commons for the budget speech on March 4. (Reuters)

Canada's budget watchdog disagrees with parts of last week's federal budget, namely the deficit forecasts and economic expectations.

In a report released Thursday on its website, the Office of the Parliamentary Budget Officer said it expects the deficit will peak at $53.0 billion in 2009-10, improving to $12.3 billion in 2014-15.

The projected deficit is $10.5 billion larger in the final year than the budget forecast tabled on March 4 by Finance Minister Jim Flaherty.

The budget office, headed by Kevin Page, said its largest deficit forecast is the result of projected revenues that are $6.0 billion lower and government expenditures that are $4.5 billion higher than those forecast in the budget.

The lower revenue expectations stem from lower corporate and personal income tax revenues, the report said.

On the economic front, the budget office also has issues with the federal budget's outlook. It noted the budget says "the uncertainty surrounding the medium-term outlook has diminished significantly since the September Update."

This conclusion is "inappropriate" given the lack of analysis of the variance in private-sector forecasts underpinning the budget, the report said.

"PBO also believes that the dispersion of private-sector forecasts likely underestimates the actual magnitude of uncertainty surrounding the economic outlook. PBO would not characterize the private-sector economic outlook as a ‘prudent’ basis for fiscal planning."

In the Commons, Flaherty slammed Page's assessment of his budget.

"The parliamentary budget officer was wrong before, and he’s wrong again. … The parliamentary budget officer is saying that the private economic outlook is not a prudent basis for fiscal planning," Flaherty said.

"He’s refusing to use projections from the strongest financial sector in the world that has weathered the recession better than any other country, and he is saying that’s not a prudent basis for economic planning."