This is likely to be Liberal Prime Minister Justin Trudeau's second-last budget before a national election, which is due late next year.

Trudeau, in power since 2015, is trailing badly in polls to his Conservative Party rival Pierre Poilievre, and the central bank has warned that new spending could get in the way of lowering interest rates from a 22-year high of 5%.

Poilievre has promised to balance the budget if elected and he alleges Trudeau's spending has fueled inflation in recent years.

"Our economic plan is about building more homes, faster, making life more affordable, and creating more good jobs. This plan will unlock pathways to a good middle class life for the next generation," Finance Minister Chrystia Freeland said in a statement along with the budget date announcement.

For the first nine months of this fiscal year, the deficit swelled by more than four times from a year earlier to C$23.6 billion ($17.4 billion).

Bank of Canada (BoC) governor Tiff Macklem last month pointed out that total government spending at federal, provincial and municipal levels was increasing about 2.25% annually, which was not helping bring down inflation.

The BoC, which targets 2% inflation, is expected to leave interest rates unchanged when it announces its latest decision on Wednesday. January inflation was 2.9%.

($1 = 1.3569 Canadian dollars)