It’s worse than we thought: Deficit is going to hit $343 Billion

The Federal debt load will hit $1.2 trillion in 2020-21, thanks to this year’s projected deficit of $343 Billion. In percentage of GDP terms it is the biggest deficit since the Second World War

The document offers a short-term economic analysis and a detailed account of what the government has spent already 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.

“Those who would have us do less ignore that, without government action, millions of jobs would have been lost, putting the burden of debt onto families and jeopardizing Canada’s resilience.”

Conservative Leader Andrew Scheer says a failure to come up with a serious plan will be a ‘wasted opportunity’ when Canadians expect ‘a path forward.’ 24:31

The government has rolled out big-ticket items in recent months like the Canada emergency relief benefit (CERB) — to help the sick and unemployed during the pandemic — and the Canada emergency wage subsidy (CEWS) to help businesses keep employees on the payroll amid massive shifts in sales and revenue. The government also has created the Canada emergency business account (CEBA) to float partly forgivable loans to businesses in need, and has set aside some $9 billion to help students this summer.

The Federal debt-to-GDP ratio is expected to rise to 49% in 2020-21 from the 31% that was the case before the pandemic hit. $81 Billion of the $3453 Billion deficit is lost tax revenue due to the slowdown in the economy caused by COVID.

But the government is projecting that, by the end of the 2020-21 fiscal year next March, it will have spent about $469 billion more than planned when it last set spending targets in December 2019.