
OTTAWA — The 2021 federal deficit is now expected to reach $184 billion, or 8.5 per cent of GDP, as Ottawa unveils pricey new spending measures to combat the economic fallout from COVID-19.
The latest deficit projection, posted by the Parliamentary Budget Officer on Thursday, is more than triple the previous deficit record set by former prime minister Stephen Harper, who ran a $56-billion gap in 2009 to fend off economic recession.
The updated forecast comes after Ottawa unveiled plans for a $73-billion wage subsidy program for Canadian businesses, an initiative which continued to face criticism on Thursday for its delayed rollout.
The ballooning budget shortfall will nudge the federal debt-to-GDP ratio above 40 per cent, according to the PBO — the highest in 20 years. That figure remains below the record-high 66.6 per cent of 1996, which led to several years of fiscal austerity measures.
Before the pandemic spread, Canada’s net debt-to-GDP ratio was around 30 per cent, and the Liberals had repeatedly claimed they would continue to drive that figure down, as a way to prove their fiscal prudence. In his 2019 fiscal update, however, Finance Minister Bill Morneau posted a 2020 deficit that was $7 billion higher than expected, which in turn pushed the national debt ratio slightly higher.
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