Liberals will deliver fall fiscal update on Nov. 30, says Freeland

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Some private-sector economists say they expect that an economic update on Nov. 30 will reveal the projected deficit for this fiscal year has increased since the summer.

Finance Minister Chrystia Freeland, who is also the Deputy Prime Minister, announced the date for the update on Monday afternoon in the House of Commons.

“We entered this crisis with a strong fiscal position, which has allowed us to provide unprecedented support to Canadians during this pandemic,” she said. “Our plan will continue to support Canadians through the pandemic and ensure that the post-COVID economy is robust, inclusive and sustainable.”

Ottawa has not delivered a budget since March, 2019, leading to considerable uncertainty about the state of federal finances.

Ms. Freeland’s predecessor, Bill Morneau, released a fiscal “snapshot” in July that projected a $343.2-billion deficit for the current fiscal year. Unlike a standard fiscal update, the July document did not attempt to forecast the size of the deficit for future years.

Finance Department projections are typically based on an average of private sector economic forecasts. Economists who contribute to that forecast say the federal government’s most recent request for numbers was in mid-September. Economists said projections are challenging in light of the economic uncertainty brought by the pandemic, and that further adjustments are required to estimate the impact of recent shutdowns in parts of the Greater Toronto Area owing to a spike in cases of COVID-19.

Three private-sector economists who contribute to the average said on Monday that they expect Ms. Freeland will forecast a higher deficit than what was expected in July, largely because the government has announced more spending since then. BMO chief economist Doug Porter said he projects the deficit will be somewhat larger than $343.2-billion, while Conference Board of Canada chief economist Pedro Antunes said it could be closer to $385-billion. Scotiabank chief economist Jean-François Perrault said it could be even larger, at around $410-billion.

Parliamentary Budget Officer Yves Giroux released a report in September that said the deficit could be slightly smaller than forecast, at $328.5-billion.

The Liberal government’s Throne Speech in September outlined plans to continue emergency support programs for the economy as required, while promising an ambitious recovery plan to come that will be based on environmental measures and infrastructure projects that create jobs. It is not clear whether the update will include new details on the government’s recovery plan or that will be left until a full budget early in the new year.

The July snapshot said the federal debt as a percentage of GDP was projected to climb from 31.1 per cent in 2019-20 to 49.1 per cent in the current fiscal year, which ends March 31, 2021.

Mr. Perrault said he would expect the update to include a range of scenarios, given the uncertainty surrounding the economic forecasts and the direction of the pandemic.

Mr. Antunes said he hopes Ms. Freeland will use the update to outline how the government intends to manage this higher debt load over the medium to long term.

“We’ve really tallied up a lot of debt and it would be nice to get an understanding of what the government is envisioning in terms of the cost of that,” he said. “We’re certainly very concerned about what might happen if interest rates do start to come up.”

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