Budget will show steep rise in deficit, debt-to-GDP no longer falling: PBO
Global News
The office's updated fiscal and economic outlook offers parliamentarians a baseline estimate of the state of federal finances heading into the Liberals' fall budget on Nov. 4.
The parliamentary budget officer said Thursday he expects the coming fall budget will reveal a sharp increase in Ottawa’s deficit that puts the government’s previous fiscal anchors in jeopardy.
Ottawa’s fiscal watchdog Jason Jacques now projects the federal government will post an annual deficit of $68.5 billion this year, up from $51.7 billion last year.
He said in a new report that he expects federal debt-to-GDP is no longer on a declining path over the medium term — a ratio that previously was a key fiscal anchor for the federal government.
The office’s updated fiscal and economic outlook offers parliamentarians a baseline estimate of the state of federal finances heading into the Liberals’ fall budget on Nov. 4.
The PBO’s update does not include plans to incrementally ramp up defence spending to meet the updated NATO benchmark of five per cent of GDP by 2035. It also doesn’t factor in Ottawa’s announced plans to reduce public service spending over the next three years.
But the report does account for some $115.1 billion in net new spending over five years announced by the government since the last fiscal update in December of last year.
The office said an economy weakened by Canada’s trade war with the United States is dragging down Ottawa’s tax revenue and pushing deficits higher as the Liberals boost capital spending.
The PBO predicts real GDP growth of 1.2 per cent in 2025 and 1.3 per cent in 2026, down from 1.7 per cent and 1.5 per cent, respectively, in the office’s March outlook.
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