Our Federal Deficit/Debt

These are highlights from T D Bank Report of today.

Not a pretty picture.

Highlights :

The federal government made a splash last week by upgrading its budget deficit profile over the next two years to about $18 billion (1% of GDP).

This shortfall excludes the cost of platform commitments or post-election promises, but builds in a $6 billion annual prudence amount to guard against weaker than expected growth. •

In this report, we re-calculate the projected path of deficits to include our below consensus assump- tions on economic growth and to incorporate the cost of platform commitments. We also have extended the forecast horizon to 5 years. •

Our analysis yields steady deficits of around $30 billion per year (1.5% of GDP), or a cumulative $150 billion through fiscal year 2020/21. Even excluding the amount set aside for prudence, cumulative deficits are likely to reach nearly $120 billion. •

The persistence of the deficits over the medium term largely reflects our downgraded view of Canada’s economic growth rate. Although projected revenue gains are likely to surpass those of spending by a slim margin, the large size of initial deficits means it will take some time to restore balance.

Indeed, without tax increases or adjustments to the profile of spending, it would take more than a decade for the budget to return to balance. • The debt-to-GDP ratio is on track to edge up to over 36% by FY 2020/21. •

The spending mix will be crucial in assessing the economic impact of this deficit spending. Projects that enhance long-term productivity and output should be emphasized to ensure the stimulus legacy is more than just higher debt.


4 thoughts on “Our Federal Deficit/Debt

  1. A future legacy for a ruined economy awaits our present young adults. How will they ever afford to have a normal life and future for their families let alone retire with enough saved to be self sufficient.


      • Good to hear from you Brian; more people need to know what our political parties in power are doing with our wallets. It seem that they believe the political trough will never go dry and that the current taxes thrust upon a nation of unemployed will refill the void. Without our natural resources being gathered and shipped to world markets chances are the political trough in Ottawa will have sprung a very large leak. It is hard to have a future robust market where people want to invest when resource companies can’t ship their products. Our transport infrastructure system in Canada has been neglected federally for decades with deteriorating bridges and highways needing resurfacing and upgrades. There is no excuse for the Federal Government in Ottawa to keep looking the other way. Instead start spending our hard earned tax dollars here at home rebuilding are nation and reinvesting in Canadians.
        Ted Haraldson


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