Canadian deficit to hit 254 billion USD this yearChristian Fernsby ▼ | July 9, 2020
The Canadian deficit is expected to hit 343.2 billion Canadian dollars (about 254 billion U.S. dollars) this fiscal year due to massive economic aid and stimulus plans against the ongoing coronavirus pandemic, Canadian Finance Minister Bill Morneau said.
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The deficit projection is up dramatically from the latest pre-pandemic economic update in December 2019, which pegged the deficit at 28.1 billion Canadian dollars in fiscal 2020-21.
The 168-page report offers a short-term economic analysis and a detailed account of what the Canadian government has spent to shore up an economy on life support.
It presents little in the way of a long-term plan to return the economy to pre-pandemic normalcy.
In total, the government has spent more than 231 billion Canadian dollars on health and safety measures as well as on direct aid to Canadians and businesses over the course of the pandemic so far.
At a press conference before tabling the report, Morneau spoke about how this current fiscal situation is an opportunity for Canada to rebuild and reshape the economy.
"We faced an enormous shock to our system," Morneau said. "It's hard to know where we will be in a month, two months, or six months. What we know for sure, is that if Canadians work together, we can continue on what we've seen as a month-by-month improvement of our situation, and our economic outcomes will be related to our success working together on our health challenges."
Due to the coronavirus spending, the Canadian government now projects its debt-to-GDP ratio will rise to 49.1 percent in 2020-21. In the pre-pandemic December economic update, Canada's debt-to-GDP ratio was at 30.9 percent and was projected to remain on track to reduce incrementally over the next few years.
The report says the overall economy is expected to contract by 6.8 percent in 2020, which is its sharpest drop since the Great Depression.
Speaking to reporters before the revised economic picture was made public, Prime Minister Justin Trudeau said that the situation would have been much worse had his government not brought in massive aid measures.
"When the pandemic first hit, a lot of people lost their jobs overnight. They didn't know how they were going to feed their families or pay their bills. Faced with this unprecedented challenge our government had two options: We could sit back and let Canadians fend for themselves ... or we could swiftly and substantially choose to support Canadians. We chose to support Canadians," Trudeau said. ■