A new report says last year's federal budgetary shortfall was smaller than the government predicted last spring.

The parliamentary budget officer projects Ottawa's 2016-17 shortfall was $2.1-billion smaller than forecast.

The report says the improved deficit figure was due in large part to lower-than-expected expenses booked for the Liberals' infrastructure investment program.

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The independent budget office projects the final 2016-17 shortfall at $21.4-billion, although the government's March prediction was $23.5-billion.

A preliminary Finance Department analysis of the federal books in May estimated that, after accounting for year-end adjustments, Ottawa ran a deficit last year of about $23-billion.

Looking at this year, the budget watchdog is predicting a shortfall of $24.8-billion – which is essentially in line with the federal 2017-18 deficit forecast of $24.4-billion.