Finance Minister Jim Flaherty's latest budget, unveiled Thursday in Ottawa, projects a $53.8-billion deficit for the current financial year and warns that the red ink won't come off the books until 2015.

The deficit projection for the current fiscal year, which concludes at the end of March, is lower than the $56-billion shortfall predicted in earlier forecasts.

Looking down the road, the government's annual deficits are expected to shrink to $49.2 billion in 2010-11, $27.6 billion in 2011-2012, $17.5 billion in 2012-2013 and to $8.5 billion by 2013-2014.

The government expects its shortfall will be down to $1.8 billion by the 2014-2015 fiscal year.

To help get out of the hole, Flaherty is planning to shut down the economic stimulus program introduced in last year's budget once the remaining $19 billion is allocated this year.

"Some are proposing big, expensive new government programs," Flaherty said in his budget speech. "These experiments would jeopardize our recovery and our long-term growth.

"Others say reducing the deficit is not a priority. Our government is taking a more responsible approach."

Flaherty also said the government expects to save about $17.6 billion over the next five years through restrained spending.

A dissenting voice? Parliament's Budget Officer Kevin Page testified in November that Canada is looking at long-term 'structural' deficits that will be hard to shake by economic growth alone. (Reuters)

The Canadian military will see the planned growth of its budget pared back, by $525 million in 2012-2013, and by $1 billion annually starting the following year.

While the national defence budget will continue to grow, it will go up more slowly than previously planned.

The cuts will start after the end of Canada's mission in Afghanistan, due to conclude in 2011.

Flaherty also said that spending on foreign aid will increase by $354 million this year to a record $5 billion annually, but it will be frozen at that level for the foreseeable future.

The Conservatives are taking steps to contain the operating costs of government.

As announced in Wednesday's throne speech, the salaries of the prime minister, cabinet ministers, members of Parliament and senators will be frozen for the next three budget years.

Federal departments will also have to fund the 1.5 per cent public service wage increase they've committed to from within their existing budgets.

While the government is taking some steps to hold the line on spending, it is also counting on higher revenues from personal and corporate income taxes, along with excise taxes and duties, in the years ahead as the economy strengthens.

Government revenues are projected to grow from $213.9 billion for the financial year that wraps up on March 31 to $296.5 billion by 2014-2015.

The expected years of deficits will push up the country's overall debt — from $517.5 billion in 2009-2010 to $622.1 billion in 2014-2015

Canada's debt to gross domestic product ratio is projected to reach a peak of 35.4 per cent in 2010-11 and to begin falling after the stimulus measures expire, decreasing to 35.2 per cent in the 2011-12 fiscal year and to 31.9 per cent by 2014–2015.