OTTAWA – Finance Minister Jim Flaherty says he's still confident the federal government will run a surplus for the current fiscal year.

But like his boss, Prime Minister Stephen Harper, Flaherty is shying away from any predictions about the longer term.

Speaking Sunday on CTV's Question Period, Flaherty repeatedly refused to speculate about whether the Conservative government will be forced to run a deficit in the years to come.

"We're on track for a modest surplus in this fiscal year," he said.

"Going forward, we have to continue evaluating the information. There's a world economic slowdown going on. There's lots going on that we need to address and evaluate as we look forward into future years."

Harper and Flaherty have been insisting for months – and did so again in the just-concluded election campaign – that Ottawa is in no danger of slipping into the red.

But the prime minister injected a new note of caution last week, limiting his no-deficit promise to the fiscal year that concludes next March.

"Others are speculating about future years," said Harper. "I think it would be premature to speculate on that."

Flaherty maintained Sunday that the Canadian economic outlook remains better than that of most major industrialized countries.

He also repeated assurances that Canadian banks, because of closer regulation and tighter rules governing their capitalization, are better placed to weather the present crisis than their counterparts elsewhere.

He conceded that "we're not an island, we get buffeted by what's going on in other places, and we're in the midst of this now."

Nevertheless, he said the Canadian economy still has a chance to escape full-blown recession.

"I think it's quite possible that Canada can (avoid recession)," he said, pointing to a recent report by the International Monetary Fund that predicted small but positive growth of 1.2 per cent, the best among the G7 countries.

In his comments Sunday, Flaherty didn't put a precise figure on the "modest" surplus he envisions for fiscal 2008-09. In his last budget in February, he projected $2.3 billion for the current year and $1.3 billion for 2009-10.

Others have been less optimistic, with some private-sector analysts predicting Ottawa is headed for a deficit of up to $10 billion in 2009-10.

Government sources said last week the Tories are looking at a range of possible belt-tightening measures, including a public service hiring freeze.

They could also consider delaying some moves promised in the recent election, such as cuts in diesel fuel taxes, until later in the government's mandate.

The possibility of running a deficit would be the "dead last option" considered by Harper and Flaherty, said one source.

The finance minister is planning to deliver a formal economic update to the new Parliament before the end of November.