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Fed surplus in 2015 could be bigger; Flaherty

Fed surplus in 2015 could be bigger; FlahertyFinance Minister Jim Flaherty speaks with the media during a news conference in the foyer of the House of Commons, Tuesday, October 22, 2013 in Ottawa. Flaherty says the federal budget surplus could be bigger than predicted in 2015.Flaherty makes the prediction in an interview with CTV's Question Period.THE CANADIAN PRESS/Adrian Wyld

OTTAWA - The federal budget surplus could be bigger than predicted in 2015, Finance Minister Jim Flaherty said in an interview aired Sunday.

The assessment falls in line with projections from the parliamentary budget office that came a month ago.

A Dec. 5 report from the PBO estimated the government could achieve a surplus of $4.6 billion by 2015, nearly $1 billion more than the estimate included in the November economic update.

In an interview with CTV's Question Period, Flaherty said Canada could have a bigger surplus than projected if both the domestic and U.S. economies continue to gain strength.

"We could have a larger surplus than we anticipate, but we will have a surplus," said Flaherty.

And, should the economies of Canada and the United States improve through 2014, the minister said the squeeze will be on the Bank of Canada to raise interest rates.

"I think the pressure will be there because the Fed in the U.S. should stop printing money, and taper off as they say," said Flaherty, who is normally reticent to speak about rates.

"And the OECD and the IMF have both said to Canada, we ought to let our interest rates go up a bit, so there will be some pressure there for that to happen."

The Harper Conservatives are relying on balancing the books to help propel the party through a federal election campaign that's scheduled for the fall of 2015.

The PBO report, however, prefaced its surplus projections on expectations that the government would maintain EI premiums at current levels, that there would be no delays in selling off some public assets and that spending restraints would continue.

And that is exactly what the government expects to do, said Flaherty.

The government has frozen basic EI premium rates at $1.88 for every $100 earned until 2016.

As well, it has announced the selloff of some assets, including the Ridley Terminals and Dominion Coal Blocks in British Columbia and the government's remaining stock of General Motors shares.

Flaherty said the government would also continue cutting spending to eliminate the budget deficit in time for the 2015-16 fiscal year.

"We're controlling our own departmental spending," the minister said, adding that his government will not reduce transfers to the provinces or cut programs or benefits.

Flaherty also backed away from recent concerns over the levels of personal debt held by Canadians, telling CTV that moves to shore up mortgage rules have kept housing debt loads in check.

"The (housing) market is calming somewhat, so I'm less concerned than I was," he said.

"And when you look at debt to net worth, as long as the housing market remains relatively strong, we don't really have a debt issue."

However, Flaherty maintained that he would intervene to further tighten mortgage rules if the market needed further cooling.

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