The federal budget deficit reached $34.4 billion at the end of March, the Finance Department reported Friday.

Spending surpassed revenue in March — the last month of Ottawa's fiscal year — adding $6.2 billion to the shortfall for the year.

The total is less than the $40.5-billion shortfall the government estimated in the March budget.

But the Finance Department cautioned that the final number will be higher than $34.4 billion, once end-of-year adjustments are made based on further information.

These would include items such as the final numbers on tax returns and valuations on assets and liabilities. But the department said it did not expect these to be enough to push the deficit above $40.5 billion, mainly because of lower-than-expected spending on government programs.

More details to come in budget

It promised a further update in its June 6 budget.

Revenues in March fell by $0.2 billion, or 0.7 per cent, compared with the same month a year earlier.

That reflected lower corporate income tax, non-resident income tax and goods and services tax revenues. Spending on government programs was down by $0.5 billion, or two per cent. Interest payments on the debt charges grew by $100 million.

The government said about half of the $34.4-billion deficit resulted from stimulus introduced during the recession, including tax reductions, increased employment insurance spending and infrastructure funding.

For the fiscal year, revenues were up by $12.9 billion, or 5.9 per cent, from 2010, primarily because of higher personal and corporate income tax, GST and other revenues.

Program spending came in at $1.0 billion, or 0.4 per cent, less than the year earlier, in part because of the end of the government's support for the auto industry in the previous year.

Interest payments on the debt rose by $1.4 billion.