A leading bank economist expects Canada’s federal deficit to reach C$100 billion this fiscal year, more than double what the government forecast in December.
Stefane Marion, chief economist at the National Bank of Canada, said the deficit would represent about 3% of the country’s gross domestic product. The projection significantly exceeds the C$42 billion deficit the government forecast in December.
Marion made the comments at the Bloomberg Canadian Finance Conference in New York, calling the upcoming November budget “the most consequential budget in a generation.”
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The increased spending comes as Prime Minister Mark Carney’s government pursues major infrastructure projects and initiatives aimed at attracting business investment to Canada. Marion emphasized that the deficit’s size is less concerning than how effectively the funds stimulate economic growth.
“What do you do with that deficit?” Marion said. “There’s got to be a big investment component that encourages investors about a future outlook.”
At 3% of GDP, the deficit would be roughly half the size of the United States deficit as a proportion of the economy, Marion noted.
Critics have targeted the government over rising debt levels, as federal debt interest costs will reach $53.7 billion in 2024-25 — exceeding all federal GST revenue.
The government will release the federal budget on November 4.
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