The federal “epidemic deficit” is projected to reach at least $ 363 billion

(Ottawa) La réponse fédérale à la pandémie devrait porter le déficit à 363,4 milliards, selon le directeur parlementaire du budget (DPB), dans sa perspective des finances publiques livrée à un peu moins de trois seméaines du premier budget du gouvernement libre Two years.

Jordan Press
The Canadian Press

In its economic statement for November, the government expected the deficit to reach $ 381.6 billion for the 2020-2021 fiscal year that ended on Wednesday. But the government has also warned that the deficit could reach 400 billion if severe restrictions and restrictions are necessary during the winter months.

The April 19 budget is expected to present updated government deficit projections for the past 12 months and years to come. The PBO report estimates that the deficit is expected to decline over time, while emergency spending measures are also expected to decline over the next 12 months.

The economy is doing better than the PBO forecast, a result that, according to experts, can be partly attributed to federal aid distributed since March and April 2020. Yves Giroud’s office revised its growth forecasts from the second semester of this year. With the economy performing better than expected and deficits narrowing over time, the PBO expects the federal finances to become sustainable.

Mr. Giroud said the economy could also get a boost from the economic stimulus that the liberals have promised – up to $ 100 billion – which is expected to be spelled out in the April 19 budget.

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The PBO did not take this spending into account in its updated forecast due to a lack of detail on how it would be used. But Giroux warns that more spending will lead to larger deficits that could spiral out of control if new permanent programs are financed with larger deficits.

Support 330 billion

His report also indicates that not all of that money might be needed. Statistics Canada said Wednesday that economic activity expanded 0.7% in January and provided a preliminary estimate of 0.5% growth for February, indicating that companies and sectors have relatively adapted to restrictions and health reservations.

BMO chief economist Douglas Porter believes that liberal spending during the pandemic is partly responsible for the economy’s resilience at the start of the year.

According to PBO calculations, the government will have spent a total of about 330.6 billion for pandemic-related support measures through 2024-2025, of which 104.6 billion are in emergency wage support and 74.1 billion for Canadian emergency funds – the two largest parts of the spending.

Conservative financial critic Ed Fast argued Wednesday that all of this spending was done without “any meaningful parliamentary oversight or scrutiny” as the liberal government failed to prepare a budget in 2020.

The Liberals promised to spend between $ 70 billion and $ 100 billion over three years on stimulus. For BMO economist, the outlook for the country is still mired in uncertainty, so it’s reasonable that Ottawa will be willing to spend a lot to support the economy over the next 12 months, Mr Carey. “I assume that in 2022 and beyond, this kind of tax support will not be necessary,” he said.

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The PBO projected that employment would reach the pre-pandemic level by the end of this fiscal year and that the unemployment rate would steadily decline to return to the pre-pandemic level in or after 2023. The improvement in conditions is believed to be due to a stronger recovery in the United States and a faster-than-expected arrival of vaccines on both sides of the border.

According to Trevin Stratton, chief economist at the Canadian Chamber of Commerce, the near-term outlook indicates that stimulus spending is unlikely to be necessary to boost growth. He believes the April 19 budget should focus on measures to encourage companies to invest, which will increase wages and jobs, help companies compete internationally and remove barriers to inter-provincial trade.

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