Federal finances had yet to slip into deficit with only three months left in the fiscal year, suggesting Finance Minister Bill Morneau may be setting the stage to announce an improved bottom line in his March 19 budget.

The Finance Department released its monthly fiscal monitor report Friday, which updates federal revenue and expenses.

The report showed Ottawa recorded a $2.5-billion surplus in December 2018, which was an improvement over the $523-million surplus recorded in December 2017. Over the first three quarters of the current fiscal year, federal finances stood at a small surplus of $324-million. That is compared to an $8.9-billion deficit over the same nine-month period the previous year.

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The pattern in recent years is for the federal government to record a large deficit in March, the last month of the fiscal year. For instance, last year the government announced a $10.6-billion deficit for March 2018 and it announced a $10.4-billion deficit in March 2017. As a result, year-to-date results should be treated with caution when projecting the expected deficit or surplus for the year.

Mr. Morneau’s November 21 fiscal update said the 2018-19 fiscal year – which ends March 31 – was on track to record a deficit of $18.1-billion. The fall update said the deficit would increase the next year to $19.6-billion, before declining gradually in future years.

Mr. Morneau met Friday morning in Toronto with private sector economists, who provide the Finance Department with forecasts that underpin budget assumptions in areas like economic growth.