Sunday, March 6, 2016

Canada - Trudeau gov. National deficit may reach $150 billion: TD


Canada - Trudeau gov. National deficit may reach $150 billion: TD. (TD).HT Cijnews.

TD’s new analysis suggests that the federal government is too optimistic in its economic projections, and specifically regarding its ability to keep a low level of deficit.

Finance Minister Bill Morneau announced on February 23, 2016 that the federal will run larger than expected deficits over two years. According to Morneau, the 2016-2017 deficit will be $18.4-billion and $15.5-billion for 2017-2018.
According to TD’s report (March 1, 2016), which re-calculated the projected path of deficits to include our consensus assumptions on economic growth and extended the forecast horizon to 5 years, the deficits will rise to 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 report reads.

“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.” Read the TD finanancial report here.

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