TORONTO (Pakistan Point News / Sputnik - 09th July, 2020) The Canadian Federal deficit is projected to soar to a record-high $254.19 billion in fiscal year 2020-21, the Economic and Fiscal Snapshot 2020 revealed on Wednesday.
The deficit, which is expected to rise to nearly 16 percent relative to the Canadian economy, comes after a $170.28 billion government spending spree in response to the novel coronavirus pandemic.
"Coupled with the severe deterioration in the economic outlook, these result in a projected deficit of $343.2 billion [US$254.19 billion] in 2020-21," the report said. "Taking into account the projected decline in nominal GDP, the federal debt-to-GDP ratio is projected to rise to 49.1 per cent in 2020-21."
The announcement defied the worst of expectations, with the Office of the Parliamentary Budget Officer projecting a $188.22 billion deficit in the upcoming fiscal year and opposition parties bracing for a $220 billion hit.
The anticipated deficit represents a 1,633 percent rise over the $14.66 billion budget shortfall in fiscal year 2019-20 and 181-fold rise from the $1.41 billion surplus the Trudeau government inherited from the previous government in 2015.
The long-awaited economic update also revealed other troubling trends in the Canadian economy. The federal debt is expected to increase by nearly 57 percent from $566.6 billion to $890 billion next year.
The government also estimates that the economy will contract by 6.8 percent in 2020, with the worst of the losses coming in the second quarter, before rebounding to a growth rate of 5.5 percent in 2021.
Canada's disconcerting fiscal picture has not only been met with criticism at home but with consequences on the global stage. Last month, Fitch Ratings stripped Canada of its AAA debt rating citing a "deterioration of public finances."
Canadians will get to assess the scope of the economic damage when the federal statistics agency releases the latest employment numbers in the Labor Force Survey for June on Friday.
