Ottawa says it posted a $6.7 billion deficit in March, the first monthly shortfall after three consecutive surpluses.
The end of the fiscal year setback was expected as last year March's deficit was even worse at $8.0 billion.
But for the year as a whole that ended March 31, the federal government remains on pace to beat its budget target of a $16.6 billion shortfall.
Before the usual final accounting adjustments, the accumulated deficit for the 2013-14 fiscal year currently sits at $12.1 billion, which puts the federal government more than $4 billion ahead of pace of its projections.
The Department of Finance says revenue increases of 5.2 per cent — $13.2 billion over last year — were the main reason for the improved balance position.
Program expenses also rose, but at a more moderate 2.8 per cent pace, or $6.8 billion more than last year.
Public debt charges were down about $176 million.