Federal deficit on track to exceed $381B

freeland

The federal government is unveiling a new round of financial supports to respond to the second wave of the COVID-19 pandemic in Canada, as the latest projections show the national deficit is projected to hit a new high: at least $381.6 billion this fiscal year.

The deficit is growing for several reasons: ongoing pandemic supports, $25.1 billion in newly-announced programs aimed at getting badly-hit businesses through the next few months, as well as the early allocations being made to help rebuild the economy once the urgent health crisis passes. The Liberals are also making moves towards boosting transfer payments to the provinces.

That federal deficit projection is considered Canada’s best-case scenario, and is up from the $343.2 billion forecast in July. However, should the pandemic situation continue to worsen and the country experiences extended restrictions, the deficit could hit $388.8 billion in 2020-21, or balloon to $398.7 billion if restrictions are escalated.

Titled “Supporting Canadians and Fighting COVID-19,” the 237-page fiscal update offers the country a revised look at the state of the federal finances and the impact the ongoing COVID-19 recession has had on Canada’s economic outlook, but offers no estimate of when, if ever, the government will balance its books.

Deputy Prime Minister and Finance Minister Chrystia Freeland unveiled the revised economic picture inside the House of Commons.

“This is the most severe challenge our country has faced since the Second World War. It is our most severe economic shock since the Great Depression, and our most severe public health crisis since the Spanish Flu a century ago. Canadians should know that their federal government will be there to help them get through it, come what may,” Freeland said in her House address.

--with files from CTV News--