The budget watchdog projects a deficit of $68.5 billion this year
The office of the Parliamentary Budget Officer (PBO) has called out the federal government’s current fiscal track, stating that it was not sustainable, according to Financial Post.
In its recently released economic and fiscal projections, PBO detailed a $68.5 billion deficit for the 2025-2026 fiscal year. This was a notable increase from the $51.7 billion recorded in the previous year, which reflected the slow movement of the Canadian economy as well as new measures in spending and revenue.
Interim Parliamentary Budget Officer Jason Jacques stated that this was the first time in 30 years where he saw the debt-to-GDP ratio going up overtime, noting that seeing this ratio either decline or stabilize was the most important fiscal anchor for a government.
“We’re hoping and certainly expecting the government as part of budget 2025 to clearly indicate what the government plans to do to address this problem, because it’s certainly not sustainable,” said Jacques.
Notably, the federal debt-to-GDP ratio is slated to be at 41.7% in 2024-2025 and will continue to stay above 43% for the rest of the decade and into 2031, according to Financial Post. Federal debt is also expected to reach $1.655 trillion by 2030-2031. A total of $115.1 billion in net new spending from 2024-2025 until the end of the decade was also estimated by the PBO.
The report also projected that the economy will see a 1.2% growth in 2025 and a 1.3% growth in 2026, due to the trade uncertainty as well as the tariffs.
The latest outlook by the PBO took into account the new measures that were announced by the federal government since its Fall Economic Statement. This also included Prime Minister Mark Carney’s recent promise of creating a $5 billion response fund for the people who were affected by the trade war with the US. However, it did not fully include the measures related to Canada’s new North Atlantic Treaty Organization commitments.
The federal budget is set to be released on Nov. 4.
