OTTAWA - The parliamentary budget overseer is predicting a budget deficit in the current fiscal year that's almost $2 billion higher than was forecast in the government's fall fiscal update last week.

The latest report from the parliamentary budget officer says the deficit this year will be $20.2 billion, while Finance Minister Bill Morneau's last prediction was $18.4 billion.

Both numbers are well below the $25.5-billion deficit projection in last spring's budget.

The budget office says it expects to see the federal deficit decline gradually, falling to $9.9 billion in 2022-23.

It says lower direct program spending accounts for most of the reduction in the deficit over the period.

In the 2016 budget, Morneau committed the government to reducing the federal debt to-GDP ratio to 31.0 per cent in 2020-21, while the budget office predicts that ratio will actually fall to 29 per cent by that date.