Federal deficit to top $112 billion in coming year due to COVID-19, PBO says

Federal deficit to top $112 billion in coming year due to COVID-19, PBO says

OTTAWA — Parliament’s budget watchdog is projecting that the federal deficit for the coming fiscal year could be $112.7 billion, a jump of $89.5 billion from previous forecasts as government spending climbs to combat the economic fallout from COVID-19.

The report made public this morning also warns that the deficit for the current fiscal year, which closes March 31, could be $26.7 billion, which would be an increase of $5.5 billion compared to the budget officer’s November forecast.

The projected deficit for the 2020-2021 fiscal year doesn’t include extra spending the Liberals announced on Wednesday in the form of a new benefit for affected workers.

That measure pushed direct spending on the government’s economic bailout package to $52 billion from $27 billion.

Parliamentary budget officer Yves Giroux’s report also predicts that the economy will contract by 5.1 per cent this calendar year, the weakest on record since 1962.

Giroux says in his report that extra stimulus measures may be required to ensure the economy hits “lift-off speed,” especially if consumer and business behaviour does not quickly revert back to “normal” fast enough.

The economic scenario laid out by Giroux assumes that the current social distancing measures designed to slow the spread of COVID-19, which have also curbed economic activity, will remain in place through August.

He warns that even under the scenario laid out by his office, the country’s economic and fiscal outlook remains “extremely uncertain.”

All the spending Giroux costed for the coming fiscal year would push the federal debt-to-GDP ratio to 38.1 per cent, a level it hasn’t been at since 2004, but below the 50-year peak of 66.6 per cent in 1996.

“While additional fiscal measures will likely be required to support the economy in the coming months, the government’s balance sheet prior to these shocks was healthy,” Giroux said in a statement.

“Given credit market access at historically low rates, and looking to historical experience, suggests that the government could undertake additional significant borrowing if required.”

This report by The Canadian Press was first published March 27, 2020.

The Canadian Press

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

40 new COVID-19 cases confirmed in Alberta

Province’s central zone still has no active cases

Alberta reports just seven new COVID-19 cases

‘Today’s numbers mark an occasion to be celebrated’

PHOTOS: Sylvan Lake grads celebrate amidst pandemic

A group of local businesses band together to throw two days worth of celebrations for the graduates

Sylvan Lake RCMP continue to search for missing man

43-year-old Steven Michael Hull is still missing and Sylvan Lake RCMP are seeking public assistance

Poplar Ridge School receives county funding for new playground equipment

Two new gaga ball pits and a resurfaced basketball court will be going in at Poplar Ridge School

Facing changes together: Your community, your journalists

Sylvan Lake News is firmly committed to seeing you through the changes ahead, but we need your help

Facing changes together: Your community, your journalists

Sylvan Lake News is firmly committed to seeing you through the changes ahead, but we need your help

Red Deerians protest against racism on Saturday

This was the third protest in the city this week

‘It’s brewing’: Inmates, guards worry about violence after COVID-19 lockdown

‘Thirteen weeks in a cage the size of your (bathroom) has been pretty devastating’

Feds sign $105-million deal with Bombardier for two new Challenger jets

Department of National Defence announced the deal with Bombardier on Saturday

‘Alarmed:’ Health critic calls for more data on COVID-19 in trucking industry

Public Health Agency of Canada does not collect information on long-haul truckers

Montreal man believes rough arrest caught on video was racially motivated

Montreal man believes rough arrest caught on video was racially motivated

N.B. police shooting of Indigenous woman leads to questions on ‘wellness checks’

N.B. police shooting of Indigenous woman leads to questions on ‘wellness checks’

Most Read