Close X
Tuesday, November 26, 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

Arrest of Surrey man in Winnipeg

Arrest of Surrey man in Winnipeg
Mounties in Surrey say a man wanted for nearly a year on kidnapping and other charges has been arrested in Winnipeg.  Surrey R-C-M-P say they had a warrant from February last year against 49-year-old Fabian Yul Brown, who was wanted for a number of charges including assault, unlawful confinement, uttering threats, break and enter, fraud and possession of stolen property.  

Arrest of Surrey man in Winnipeg

BC Real Estate Association numbers point to market 'uptrend' at beginning of 2024

BC Real Estate Association numbers point to market 'uptrend' at beginning of 2024
The BC Real Estate Association says there was a nearly 30 per cent increase in home sales last month compared with January 2023, while prices were also up.  The association says 3,979 sales were completed last month, for an average price of $957,909, a more than 10-per-cent jump from the year before.

BC Real Estate Association numbers point to market 'uptrend' at beginning of 2024

B.C. report says climate change brings health risk, as doctor fears 'colossal harms'

B.C. report says climate change brings health risk, as doctor fears 'colossal harms'
Communities across British Columbia needs to prepare for a climate-related health crisis like the deadly 2021 heat dome every year, according to the lead contributor to a report on health risks associated with climate change. Dr. Michael Schwandt, a medical health officer with Vancouver Coastal Health, said the region needs to increase its resilience to extreme heat events, and risks "colossal harms" if it doesn't.

B.C. report says climate change brings health risk, as doctor fears 'colossal harms'

Protest outside Mount Sinai Hospital 'reprehensible' show of antisemitism: Trudeau

Protest outside Mount Sinai Hospital 'reprehensible' show of antisemitism: Trudeau
Prime Minister Justin Trudeau is denouncing a protest outside a Toronto hospital as a "reprehensible" display of antisemitism as police say they are investigating several incidents that took place during the demonstration.

Protest outside Mount Sinai Hospital 'reprehensible' show of antisemitism: Trudeau

Bell CEO, other execs called to committee to testify over recent job cuts

Bell CEO, other execs called to committee to testify over recent job cuts
Members of Parliament have invited several top executives from BCE Inc. and Bell Canada to testify later this month about the company's decision to cut about nine per cent of its workforce this year.  The House of Commons heritage committee has agreed to invite BCE Inc. CEO Mirko Bibic to address the cuts, which include impacts on newsrooms across the country. 

Bell CEO, other execs called to committee to testify over recent job cuts

B.C. eyes community, non-profit, underused lands to build affordable rental units

B.C. eyes community, non-profit, underused lands to build affordable rental units
The New Democrat government's almost $3 billion BC Builds program will target property owned by governments, communities and non-profits, and provide low-cost financing to fast-track affordable rental developments on underutilized lands across B.C., he said.  

B.C. eyes community, non-profit, underused lands to build affordable rental units