Canada's federal budget deficit narrows

Canada's federal budget deficit amounted to $4.2 billion during the first two months of the fiscal year, much smaller than in the same period last year when the economy was still mired in recession.

The Finance Department's fiscal monitor, released Friday, notes the government spent $7.2 billion more than it took in during April and May of 2009.

The improvement in the deficit year-over-year was most visible in revenues from personal income taxes and provincial sales and services taxes.

The government says the deficit includes about $1.7 billion in spending under the stimulus package introduced in January 2008.