Freeland to table budget April 7; deficits, rates, and housing issues

The countdown clock is officially ticking toward this year’s federal budget, with Finance Minister Chrystia Freeland announcing the budget will be tabled on April 7.

The countdown clock is officially ticking toward this year’s federal budget, with Finance Minister Chrystia Freeland announcing the budget will be tabled on April 7. 

The rare April budget – coming after the beginning of the federal government’s fiscal year – is expected to lay out how the government views Canada’s path out of the ravages of the pandemic, unveil details on government support for a slate of issues including housing affordability, and a provide a path back to more normalized spending after the feds unleashed torrents of cash to help the domestic economy.

While the federal government has yet to outline a path back to balance, the trend from the fall fiscal update is clear: smaller deficits through the end of the forecast horizon, from a $58.4 billion deficit projection in fiscal 2022-23 to a modest $13.1 billion in fiscal 2026-27. What those projections don’t account for, however, is the interim measures announced since the December update which the Parliamentary Budget Officer projects could amount to $48.5 billion worth of additional spending through to 2025-26.

That spending path ties directly back to what is widely considered to be the federal government’s “fiscal anchor” through the current period of deficit spending: a declining debt-to-GDP ratio. Essentially, that anchor is a pledge by Ottawa that debt increases will not outpace overall gains in economic growth, thus keeping Canada on a sustainable fiscal path. According to the fall fiscal update, that figure was expected to peak at 48.0 per cent in fiscal 2021-22, declining steadily to 44 per cent by the end of the forecast horizon. There’s some optimistic wiggle-room in that projection with the key ratio falling to 42.1 per cent in 2026-27 under the Department of Finance’s faster recovery scenario.