The parliamentary budget officer has projected an increase in Ottawa’s annual deficit to $68.5 billion for the current year, up from $51.7 billion in the previous year. Interim PBO Jason Jacques stated in a recent report that the federal debt-to-GDP ratio is no longer expected to decline in the medium term, which was previously a significant fiscal indicator for the federal government.
The latest fiscal and economic outlooks from the parliamentary budget office, released on Thursday morning, provide parliamentarians with a baseline assessment of the federal finances as they prepare for the upcoming fall budget on Nov. 4. The updated report does not incorporate the government’s intentions to gradually boost defense spending to meet the revised NATO target of five percent of GDP by 2035, or the planned reductions in public service spending over the next three years.
However, the report does factor in approximately $115.1 billion in new net expenditures over the next five years, announced by the government since the last fiscal update in December last year. The office highlighted that Canada’s ongoing trade disputes with the United States have weakened the economy, leading to lower tax revenues for Ottawa and contributing to the rise in deficits as the government increases capital investments.