A $1.7 billion budget surplus in June offset deficits in April and May, allowing the federal government to end the first quarter of its financial year in the black.

As a result of the strong showing in June, Ottawa ended the first quarter of its current budget year, which began in April, with a $1.2 billion budget surplus.

The surpluses are smaller than they were at the same time last year, mainly because a slowing economy is reducing corporate and personal tax revenues.

The April-June quarterly surplus this year was down by $4.4 billion from the same period last year. June’s surplus was down by $1.1 billion.

The finance department says that, on balance, developments in the first three months of the 2008-2009 fiscal year are “consistent” with budget projections.

In a release accompanying the first quarter numbers, federal Finance Minister Jim Flahert cut the government’s outlook for economic growth this year.

“The global economy is slowing and Canada is not an island,” Flaherty said. “While over the course of the year we are projecting positive economic growth, the outlook for real GDP growth in Canada, based on private sector forecasts, has been revised down to 1.1% in 2008, from 1.7% in the budget projection.”

Flaherty added, “Canada is in a better position than most countries to weather this economic storm as our economic fundamentals remain solid.”