Canada will run a deficit of 64 billion Canadian dollars (51 billion U.S. dollars) over the next two years as the government moves to stimulate the economy with shrinking revenue.
Under the new budget to be tabled next week, the country will have a deficit of 34 billion Canadian dollars (27 billion U.S. dollars) in the coming fiscal year, and 30 billion (24 billion U.S. dollars) in the following year, a senior government official said.
The government will return to a surplus within five years, he said.
The budget, which is at the center of a political storm, will be put to a parliamentary vote after it is tabled on Jan. 27. The opposition may reject it, leading to the defeat of the Conservative government.
The announcement marks a significant shift for the country's finances as between 1998 and 2008; the Canadian government ran sizable surpluses and paid down about 105 billion Canadian dollars (84 billion U.S. dollars) on the national debt.
Speaking on condition of anonymity, the official told reporters the government decided to announce the size of the deficits now because of intense speculation about the budget.
By releasing the size and nature of the deficits ahead of the federal budget, the government might be hoping to soften the impact of the deficit blow, analysts say.
The size of the deficit is largely attributable to the government's decision to include billions in stimulus spending beginning in this year's budget. That includes immediate spending on infrastructure and help for Canadians hardest hit by the economic downturn.