Canada Unveils $61.9 Billion Deficit As Finance Minister Resigns
Canada’s Finance Minister Chrystia Freeland resigned from her cabinet position on Monday, just hours before the Department of Finance released its fall economic statement. The statement revealed a deficit of $61.9 billion for the 2023-24 fiscal year, significantly overshooting the government’s previous target of C$40.1 billion.
The fiscal update, tabled by Government House Leader Karina Gould in Freeland’s absence, comes amid growing economic uncertainty, particularly due to U.S. President-elect Donald Trump’s threat to impose 25% tariffs on all Canadian imports.
Freeland’s resignation, announced via social media, reportedly stems from disagreements with Prime Minister Justin Trudeau over economic policies and the government’s ability to adhere to its fiscal anchors. The rift between the two top Liberals has been simmering for some time, with recent tensions linked to measures such as the GST/HST pause and proposed workers’ benefit cheques.
Despite missing its deficit target, the government’s 270-page economic statement paints an optimistic picture, claiming a “soft landing” for the economy and touting Canada as the first G7 country to cut interest rates. The document outlines a four-pillar economic plan focusing on generational investments, AI advantage, geopolitical risk management, and industrial transition.
However, fiscal policy experts warn that the government’s projections may be overly optimistic, particularly given the potential impact of U.S. tariffs. Fred O’Riordan, tax policy leader at EY Canada, cautioned that the forecast “is quite likely overly optimistic, even the downside scenario”.
More to come.
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