Canada budget won't show early surplus - finance minister

By Leah Schnurr

TORONTO (Reuters) - Canada's federal budget next Tuesday will stay the course towards eliminating the deficit but won't try to "force the numbers" in order to reach a surplus sooner than 2015, Finance Minister Jim Flaherty said on Friday.

Flaherty told reporters the budget would contain initiatives to encourage growth and jobs but that his priority was to "keep Canada the envy of the world" by fulfilling its promise to reach a budget surplus in 2015, an election year.

He made clear there was no doubt the goal would be achieved.

"If we really forced the numbers, we might be able to get close to a balanced budget," Flaherty told reporters when asked if he could balance the books a year earlier than planned.

"I've never been a believer in that," he said. "I think when we balance, it will be next year, we need to have the confidence of the Canadian people that we are clearly balanced without question."

In November, Ottawa estimated a shortfall of C$17.9 billion ($16.27 billion) in the 2013-14 fiscal year ending March 31, or about 1 percent of gross domestic product. It saw the deficit narrowing to C$5.5 billion in 2014-15 followed by a surplus of C$3.7 billion in 2015-16.

The projected balances include a C$3 billion contingency fund in case of a big economic shock or natural disaster like the Alberta floods last year. Excluding the contingency fund, it wouldn't take much improvement to achieve an underlying surplus.

Flaherty was also asked if the 2015-16 budget surplus would be larger than predicted in November. "Could be. We'll see," he replied.

But he repeated a need to be cautious because of a fragile world economy, citing equity markets being "hammered" earlier this week.

Flaherty spoke after buying a pair of shoes, a pre-budget tradition, at a factory and store in Toronto that specializes in light industrial safety footwear.

($1 = 1.10 Canadian dollars)

(Additional reporting by Randall Palmer; Writing by Louise Egan; Editing by James Dalgleish and Meredith Mazzilli)