Carney has ‘limited room to cut taxes’ as debt-to-GDP ratio to grow: PBO
Global News
The federal debt-to-GDP ratio in Budget 2025 is projected to be higher compared with the 2024 fall economic statement, 'and is no longer projected to be on a declining path.'
Prime Minister Mark Carney’s government has “limited room to cut taxes” with the fiscal deficit projected to balloon after Budget 2025, a report by the Parliamentary Budget Office said on Thursday.
The PBO published its independent assessment of Budget 2025, highlighting “financial pressures and concerns about transparency.”
“According to the PBO, the Government has limited room to cut taxes or increase spending if it wants to keep the federal debt-to-GDP ratio in 2055–56 at or below its current level,” the PBO said in a press release accompanying the report.
The debt-to-GDP ratio is an economic metric that measures a country’s debt against the total value of goods and services produced in the country.
The federal debt-to-GDP ratio in Budget 2025 is projected to be higher compared with the 2024 fall economic statement, “and is no longer projected to be on a declining path over the medium term,” the PBO report said.
“Budget 2025 projects the debt-to-GDP ratio will stay mostly stable over the next 30 years,” interim parliamentary budget officer Jason Jacques said in a statement accompanying the report.
“This is different from the last three years, when fiscal policy provided more flexibility to deal with future risks.”
Budget 2025 projects a deficit of $78.3 billion, or 2.5 per cent of GDP, for the financial year 2025-26. The budget projects that the debt-to-GDP ratio will fall to 1.5 per cent by 2029-30.
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