Canada’s Federal Deficit Could Reach $256 Billion as a Result of Coronavirus Pandemic
According to the latest scenario analysis, Canada’s budget deficit could run as a high as $256 billion in the wake of the coronavirus pandemic.
Parliamentary Budget Officer Yves Giroux updated his previous deficit figure estimate by $3.8 billion, stating a more positive economic outlook as the reasoning behind an offset in government spending. The figure is comprised of $169 billion worth of emergency spending specifically for mitigating the negative effects of the pandemic. Thus, the federal debt currently sits at $962.1 billion, which translates to approximately 44.4% of GDP.
Previously, the parliamentary budget officer predicted the Canadian economy to contract by 12% in the remainder of the year, but according to the most recent analysis the predicted figure now sits at 6.8%. As some restrictions are being lifted, Canadians are beginning to slowly return to work, but many are still reliant on the federal government’s emergency financial aid.
As a result, Giroux estimates that the CERB program will amount to at least $61.1 billion, following the Liberal’s plan to extend the program by an additional 8 weeks. However, $7.7 billion is anticipated to be recouped nect year in income taxes.. In the meantime, the federal wage subsidy program is estimated to cost a total of $55.6 billion.
Information for this briefing was found via Office of the Parliamentary Budget Officer, CBC News, and Bloomberg. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
