Close X
Saturday, November 23, 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

Despite council support, VCH no longer considering contentious drug consumption site

Despite council support, VCH no longer considering contentious drug consumption site
Vancouver Coastal Health says it is no longer considering a stand-alone supervised consumption site in Richmond, British Columbia. The decision was announced late Wednesday in a statement from VCH, which said that, based on the latest Public Health data, such a facility would not be the most appropriate service for those at risk of overdose in the community.

Despite council support, VCH no longer considering contentious drug consumption site

Safety board calls for changes after fatal 2021 Nunavut helicopter crash

Safety board calls for changes after fatal 2021 Nunavut helicopter crash
The Transportation Safety Board is calling for improvements after an investigation into a deadly helicopter crash in Nunavut. The helicopter went down in 2021 on a trip to survey polar bear populations on Griffith Island, about 20 kilometres southwest of Resolute Bay, Nvt.  Two crew members and a wildlife biologist were killed. 

Safety board calls for changes after fatal 2021 Nunavut helicopter crash

B.C. wine grapes facing up to 99% production drop due to January cold snap

B.C. wine grapes facing up to 99% production drop due to January cold snap
A new report says British Columbia's wine industry is anticipating "catastrophic crop losses" of up to 99 per cent of typical grape production due to January's intense cold snap. A February report from Wine Growers British Columbia and consulting firm Cascadia Partners says preliminary industry estimates are calling for crops to produce only one-to-three per cent of typical yields for wine grapes, mostly coming from relatively mild Fraser Valley and Vancouver Island.  

B.C. wine grapes facing up to 99% production drop due to January cold snap

BC man banned from investment market

BC man banned from investment market
A Vancouver man convicted of fraud has been permanently banned from B-C's investment market. The B-C Securities Commission says a panel has concluded that Jeffrey Shaughnessy's misconduct was "extremely serious," and the man posed "a significant ongoing risk" to the public and the capital markets had the ban not been put in place.

BC man banned from investment market

North Vancouver RCMP warn of radioactive material in equipment in stolen car

North Vancouver RCMP warn of radioactive material in equipment in stolen car
Police in North Vancouver say a car stolen from an underground parking lot Tuesday had a piece of equipment containing radioactive material inside. Mounties say they responded to a theft call at a gym on Marine Drive, and the vehicle contained a "nuclear soil moisture density gauge" used in construction and other industries.   

North Vancouver RCMP warn of radioactive material in equipment in stolen car

Cold season challenging for cherry growers

Cold season challenging for cherry growers
This season will likely be the most challenging cherry growers have ever experienced in British Columbia, a farmer and industry leader says, after a widespread cold snap damaged trees and buds last month. Sukhpaul Bal, president of the BC Cherry Association, said the deep freeze was especially destructive because temperatures were mild in the preceding weeks.

Cold season challenging for cherry growers