OTTAWA, May 26:The government of Canada's coffers are overflowing with millions of dollars more than predicted in its latest budget, Finance Minister Jim Flaherty announced on Friday.

For the period April 2006 to March 2007, the budgetary surplus is now estimated at 13.7bn dollars (US$12.7bn), up from a 12bn-dollar (US$11.1bn) surplus posted in the same period last year.

After deducting the cost of additional environmental and health spending introduced in March, Flaherty estimates the surplus to be 9.7 billion dollars, about 500 million dollars higher than first projected.

Budgetary revenues rose 11.0 billion dollars (10.2 billion US), or five percent, reflecting strong growth in income tax revenues.

Program expenses were up 9.2 billion dollars (8.5 billion US), or 5.2 percent, due to both higher federal transfers to the provinces and other program expenses.

Public debt charges were up 100 million dollars (92.6m US).

The final surplus for 2006-07 however will only be known in September 2007. The government has committed to use surplus funds for debt reduction, up to three billion dollars (US$2.78bn) per year, and to cut taxes.

Canada is the only Group of Seven industrialized nations to post a surplus in recent years.

—AFP