Embarrassment of Riches

Canada's Finance Minister Douglas Abbott is financially embarrassed again. But it is the kind of embarrassment that other finance ministers would gladly endure. At the start of Canada's fiscal year, Abbott had predicted a surplus of $9,000,000. But last week, at the end of only the first quarter, he already had a surplus of more than $262,500,000.

The same thing happened last year, when Abbott budgeted for a surplus of $30 million and finished the year with nearly $1 billion to spare. Chief reasons for both surpluses: the Canadian business boom and the government's avoidance of direct price and wage controls (insisting, until recently, on strict credit controls).

Last year Abbott was accused of over taxing the public and misplanning the country's financial affairs. Last week he coughed apologetically and explained that $262,500,000 surplus is really not so big as it looks. In the next few months, he said, many outstanding expenditures (e.g., defense contracts, tax subsidies) must be paid off, which will use up much of the government's cash.

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