Canada's new Liberal government says it has inherited billions of dollars of deficits from the former Conservative government.

Finance Minister Bill Morneau said Friday that without accounting for planned Liberal spending and stimulus measures, the deficit would be US$2.3 billion (CA$3.0 billion) in the current fiscal year and $US2.9 billion (CA$3.9 billion) in 2016-17, with deficits continuing through 2018-19. The former Conservative government had predicted a $2.7-billion surplus in the spring.

However, Morneau says the government will fulfil its pledge to balance the books before the next election despite the weaker economic environment and the steeper fiscal obstacles.