Canada’s budget deficit is projected to balloon to a record Can$382 billion (US$284 billion) as government spending skyrockets to combat the spread of the novel coronavirus, the finance minister announced on Monday, November 30.
The amount for the 2020-2021 fiscal year, which began on April 1, is higher than an estimate of Can$343 billion announced in July and almost 20 times higher than the shortfall in the last budget released in March 2019, before the pandemic.
Finance Minister Chrystia Freeland also said the government was preparing to spend another Can$70 billion to Can$100 billion over 3 years to jolt the economy once the pandemic is over.
The aim, she said, is to build back the economy to be greener, more inclusive, more innovative, and more competitive.
“When the virus is under control and our economy is ready for new growth, we will deploy an ambitious stimulus package to jump-start our recovery,” Freeland told the House of Commons.
“Spending roughly 3% to 4% of GDP (gross domestic product), over 3 years, our government will make carefully judged, targeted, and meaningful investments to create jobs and boost growth,” she said.
The pandemic shut down large swathes of the Canadian economy in March, and several regions are now under lockdown again as a second wave of COVID-19 – worse than the first – sweeps across the country.
The government has spent hundreds of billions to support out-of-work Canadians and businesses that were forced to close temporarily.
Notably, Can$1 billion was spent on vaccine agreements to secure 429 million doses from 7 pharmaceutical firms, and Can$322 billion went to Canadians directly, so far.
As a result, the government’s debt is set to rise to more than Can$1.2 trillion.
The debt as a percentage of GDP will increase from 31.2% last year to 50.7% this year, and 52.6% next year, according to the finance department.
Freeland’s fall economic statement – essentially a mini-budget – also signaled the government’s intent to move ahead on charging a sales tax on video streaming subscriptions like Netflix, and to restrict stock option deductions, as well as support home energy retrofits and more electric car charging stations. – Rappler.com
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