Close X
Friday, November 22, 2024
ADVT 
National

Will Ottawa meet its fiscal target? Economists split as deficit tracks higher

Darpan News Desk The Canadian Press, 14 Mar, 2024 10:26 AM
  • Will Ottawa meet its fiscal target? Economists split as deficit tracks higher

Finance Minister Chrystia Freeland has pledged that the government will meet its fiscal targets in the upcoming federal budget, but economists say achieving that goal will be challenging as the deficit tracks higher. 

Amid mounting pressure to rein in spending, the Liberals unveiled new fiscal guardrails in the fall that aim to limit deficits. Among the government's promises was that this year's deficit will not exceed $40.1 billion.

In new reports previewing the federal budget, TD and Desjardins offer different takes on whether the government will meet its goal for the current fiscal year. 

TD says although the deficit appears to be tracking closer to $55 billion, it is projecting it will be capped at $40 billion. 

"I think the government has an ability to do this," said James Orlando, TD's director of economics. 

Meanwhile, Desjardins is projecting the deficit to come in at $47 billion, not far off from the parliamentary budget officer's forecast published last week. 

"When we look at the information that the government publishes, for the current fiscal year it seems as though unless there's a big surprise it will be very difficult for the federal government to meet its fiscal anchor," said Randall Bartlett, senior director of Canadian economics at Desjardins.

The PBO's projections suggest the federal deficit will grow to $46.8 billion for the current fiscal year, provided no new measures are introduced and existing temporary measures expire as scheduled.

According to the Finance Department, the federal deficit for the current fiscal year stood at $23.6 billion by the end of December.

Last month, Freeland doubled down on the government's commitment to its new spending rules during a news conference in Poland. 

"For our government, it is very, very important to invest in Canada and Canadians … and to do so in a fiscally responsible way," she said.

"We laid out in the fall economic statement some fiscal guideposts, and we will meet them."

The government is also looking to lower the debt-to-GDP ratio in 2024-25 relative to the projection in the fall economic statement, and keep deficits below one per cent of GDP beginning in 2026-27.

The federal budget, which Freeland is set to present on April 16, comes at a time when cost-of-living issues continue to dominate Canadian politics and the Conservatives maintain a healthy lead in the polls. 

The Liberal government has signalled the budget will focus on challenges facing young people, with housing topping that list. 

It's also expected to contain more details on the newly announced pharmacare program, which promises to cover contraceptive and diabetes medication. 

But does the government have any money to spend on these priorities?

Orlando said TD expects the government will have about $5- to $10 billion of fiscal room that could help fund some of their priorities. 

"This would mean that the government could either bank this amount of money and reduce the budget deficit for future years, or they could maintain their current deficit outlook. And that would mean that they would be spending a little bit more money," Orlando said. 

Both economists said the government has benefited from stronger-than-expected economic growth. At the same time, however, they noted program spending and public debt charges have risen faster than the government had projected. 

Although things are looking difficult, Bartlett said it's not impossible for the government to find a way to keep this year's deficit from rising beyond $40 billion.

For example, the federal government could sell off assets, he said. Alternatively, there could be lapsed spending — which refers to money allocated to departments that goes unspent. 

But Bartlett said those wouldn't amount to real savings.

"We need to see something more long-term in nature, as to get a sense of … if they do reach some fiscal target this year, how they're going to do it next year, and how they're going to keep doing it in the future," Bartlett said. 

MORE National ARTICLES

Driver speeding in bus lane in North Vancouver is issued $1,500 fine

Driver speeding in bus lane in North Vancouver is issued $1,500 fine
RCMP in North Vancouver say a $1,500 fine was handed out to a driver caught speeding down a bus lane. Police credit the discreet and quick actions of an officer on a motorcycle for nabbing and ticketing a driver last October.

Driver speeding in bus lane in North Vancouver is issued $1,500 fine

RCMP see no foreign interference as two teenagers charged over Surrey shooting

RCMP see no foreign interference as two teenagers charged over Surrey shooting
Two 16-year-old youths were arrested on Feb. 12 and are being held in custody as they await their next court appearance. RCMP say the BC Prosecution Service approved charges of discharging a firearm into a place and possessing a loaded prohibited firearm.

RCMP see no foreign interference as two teenagers charged over Surrey shooting

B.C. New Democrat government makes pledges to homebuyers, renters, in throne speech

B.C. New Democrat government makes pledges to homebuyers, renters, in throne speech
British Columbia's New Democrat government is pledging more homes for first-time buyers and eviction protection for renters in a throne speech that promises affordability measures in this week's budget. The throne speech, read in the legislature by Lt.-Gov. Janet Austin, says the government is putting forward a vision where everyone can get ahead and no one is left behind

B.C. New Democrat government makes pledges to homebuyers, renters, in throne speech

RCMP ask prosecutors to consider charge in B.C. crane collapse that killed 5

RCMP ask prosecutors to consider charge in B.C. crane collapse that killed 5
RCMP investigators have asked British Columbia prosecutors to consider criminal charges in a July 2021 construction crane collapse that killed five people in the Interior city of Kelowna. Kelowna Mounties say a report has been submitted "for charge assessment for criminal negligence causing death." 

RCMP ask prosecutors to consider charge in B.C. crane collapse that killed 5

Trudeau boosts B.C.'s housing plan with $2 billion in federal financing

Trudeau boosts B.C.'s housing plan with $2 billion in federal financing
The federal government is doubling the financing available for a British Columbia housing plan the prime minister called "transformative." Justin Trudeau was in Vancouver on Tuesday to announce that his government was adding another $2 billion in financing to the province's BC Builds plan aimed at constructing more middle-income rental housing.

Trudeau boosts B.C.'s housing plan with $2 billion in federal financing

B.C. New Democrat government delivers throne speech, budget on way in election year

B.C. New Democrat government delivers throne speech, budget on way in election year
The political agenda for British Columbia Premier David Eby's NDP government heading into an election this fall will take shape today with the delivery of a throne speech starting the spring legislative session. The speech outlining the government's goals this year comes just ahead of the provincial budget on Thursday and the election this fall.

B.C. New Democrat government delivers throne speech, budget on way in election year