OTTAWA — The new Trudeau government will have to contend with bigger-than-expected baseline deficits in the coming years as it rolls out its promised spending plans, the federal budget watchdog says.
The lowered forecast suggests it will be tougher for the Liberals to fulfil their election promise to balance the books by 2019-20 after three years of predicted deficits.
The parliamentary budget office said Tuesday it has downgraded its economic outlook for Canada as the country grapples with weaker growth and lower revenues.
The office is now forecasting a $1.2-billion surplus in 2015-16, but says it will be followed by four straight deficits that are on average $2.4 billion lower per year than its April projection.
It expects shortfalls of $3 billion in 2016-17, $4.7 billion in 2017-18, $5 billion in 2018-19 and $4.6 billion in 2019-20.
The budget office says its predictions do not take into account the fiscal impact of any measures in the Liberal government's election platform, which was based on a July report from the PBO.
In April, the budget office said Ottawa would run $1.3-billion surpluses in 2015-16 and in 2016-17, before posting a $2.1-billion deficit in 2017-18.
The spring forecast also projected shortfalls of $2.9 billion in 2018-19 and $900 million in 2019-20.
The Liberal government has pledged to run deficits of just under $10 billion in each of the next two years and a $5.7-billion shortfall in 2018-19. It vows to generate a $1-billion surplus in 2019-20.
The government has yet to say whether it will release a fiscal update before it tables its first budget.
