OTTAWA — Finance Minister Ralph Goodale will warn his caucus colleagues this week that Christmas is over, so they shouldn't expect any gifts in the near future.

Goodale, who has been finance minister for less than month, will update members of the national Liberal caucus on the state of the federal books when they meet for two days, beginning Wednesday. And the books aren't in very good shape, Goodale will warn.

Figures compiled late last year by his predecessor, John Manley, showed the federal coffers are almost bare, with a surplus of only about $2.3 billion expected in the current fiscal year.

Since $2 billion of that has already been pledged to the provinces for health care, very little is left for initiatives by new Prime Minister Paul Martin, Goodale is expected to state.

His parliamentary secretary John McKay said he thinks Goodale will deliver an economic update that warns MPs to "scale your expectations accordingly."

"The reality is that our GDP did a meltdown over the course of 2003," McKay said Monday.

Last November's fiscal update drove home the message that Canada's economy - buffeted by a relentless series of economic crises - underperformed expectations last year.

The former finance minister predicted growth in Canada would reach only 1.9 per cent when the books are closed on 2003, with GDP expected to expand by only about three per cent in 2004.

Those numbers were down from initial projections made at this time last year of 3.2 per cent for 2003, rising to 3.5 per cent for 2004.

The economy was hit hard last year by crises ranging from SARS and mad cow to forest fires in B.C. and a massive power blackout in Ontario. The soaring Canadian dollar also hurt export businesses and helped drive down tax revenues for Ottawa.

Despite expectations of a tight budget, Liberal MPs meeting late last year outlined a long list of spending priorities they want to see included in a speech from the throne expected in about a month's time.

And some critics expect the situation won't end up being as dire as officials are warning.

Last fall, Manley reported a $7 billion surplus for fiscal 2002-2003 - more than double the $3 billion originally forecast.

Extra wiggle room for Goodale also could come from the freeze on spending on capital projects and some raises for civil servants that Martin announced as soon as he took over from retired prime minister Jean Chretien last month.

Martin also began an immediate effort to look for savings in federal programs, to free up money for new priorities.