TORONTO (Pakistan Point News / Sputnik - 01st December, 2020) Canada is staring down a $307 billion budget deficit in fiscal year 2020-21, Deputy Prime Minister Chrystia Freeland said in her first economic update as finance minister.
The Fall Economic Statement (FES) unveiled on Monday added at least an additional $40 billion to the deficit record-breaking $254.19 billion deficit projected in July by then-Finance Minister Bill Morneau, who reigned and was replaced by Freeland amid the scandal that he accepted expense paid trips from the WE Charity.
"Including additional measures taken since [Economic and Fiscal Snapshot] 2020 and announced in this statement, the deficit is projected to reach $381.6 billion [US$293.46 billion] in 2020-21," the FES said.
However, the deficit could be as high as $306.61 billion if the measures to deal with the so-called "second wave" of the novel coronavirus pandemic inflicts additional damage on Canada's economy for a sustained period of time, the FES said.
Despite the record-breaking deficit and a Federal debt-to-GDP ratio that will exceed 50 percent for the foreseeable future, the Liberal government is proposing a stimulus of 3 to 4 percent of the country's GDP - or $77 billion - per annum over the next three fiscal years to kick-start the economic recovery.
Freeland explained that low debt servicing costs and new taxes on digital media platforms as well as foreign homebuyers will mitigate the costs of the ambitious spending program.
Canada's ability to service debt has also come into question, with Fitch Ratings stripping Canada of its AAA debt rating citing a "deterioration of public finances" in July, and warning of additional downgrades with the fiscal outlook does not improve.
Canadians will next get to assess the scope of the economic damage when the federal statistics agency releases its third quarter GDP results on Tuesday.