Canada's budget deficit to increase

TORONTO -- Canada's finance minister said Tuesday the federal deficit will soar to a record 50 billion Canadian dollars ($44 billion) this fiscal year because the recession is wreaking havoc on the government treasury.

Finance Minster Jim Flaherty said Tuesday the revised budget will exceed the financial shortfall originally forecast in January for the 2009-2010 fiscal year by nearly 50 percent.

"We are going through a deeper economic slowdown than anticipated," he said. The recession has hurt government tax revenue and raised spending requirements, he said.

"Our deficits are affordable but they will remain short-term," Prime Minister Stephen Harper said.

Canada's central bank has projected that then country's gross domestic product fell 7.3 percent in the first three months of 2009, dropping at the steepest pace in decades.

Canada has avoided bank bailouts and none of its major financial institutions have failed. However, Canada and its economically hard-hit neighbor, the United States, have the largest trading relationship in the world and the financial crisis and the global sell-off of commodities have hit Canada hard since last fall.

The government unveiled a $32 billion economic stimulus package in January.

But widespread job losses have hurt the economy, with a record 273,300 jobs lost in the first three months of the year.