Finance Minister Chrystia Freeland has assured that the government will adhere to its fiscal targets in the upcoming federal budget, but economists express skepticism as the deficit continues to rise.
Despite the introduction of new fiscal guardrails aimed at limiting deficits, including a promise that this year’s deficit will not surpass $40.1 billion, TD and Desjardins offer conflicting perspectives on the likelihood of meeting this goal.
TD projects the deficit to be capped at $40 billion, whereas Desjardins forecasts a higher deficit of $47 billion, aligning closely with the parliamentary budget officer’s recent projection.
While Freeland reiterates the government’s commitment to fiscal responsibility, emphasizing the importance of investing in Canada and Canadians, economists raise concerns about the challenges in achieving the fiscal anchor.
As the federal budget, scheduled for presentation on April 16, approaches, attention is drawn to the dominance of cost-of-living issues in Canadian politics and the Liberal government’s focus on addressing challenges facing young people, particularly in housing. Additionally, details on the newly announced pharmacare program are anticipated.
Despite the complexities, economists suggest that the government could still manage to prevent the deficit from exceeding $40 billion through measures such as asset sales or lapsed spending. However, they emphasize the necessity for long-term solutions to sustain fiscal targets beyond the current fiscal year.