{"id":44928,"date":"2024-03-14T14:15:54","date_gmt":"2024-03-14T14:15:54","guid":{"rendered":"https:\/\/www.pantheregroup.com\/2024\/03\/14\/ottawa-on-track-to-miss-deficit-target-desjardins-warns\/"},"modified":"2024-03-14T14:15:54","modified_gmt":"2024-03-14T14:15:54","slug":"ottawa-on-track-to-miss-deficit-target-desjardins-warns","status":"publish","type":"post","link":"https:\/\/www.pantheregroup.com\/2024\/03\/14\/ottawa-on-track-to-miss-deficit-target-desjardins-warns\/","title":{"rendered":"Ottawa on track to miss deficit target, Desjardins warns"},"content":{"rendered":"
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Canada is unlikely to meet its deficit goals unless it makes substantial spending cuts or finds new sources of revenue, according to the country\u2019s largest financial co-operative.<\/p>\n

An \u201coutsized pace of spending\u201d means Canada is on course to run a budget shortfall of about $47 billion for the fiscal year that ends March 31, according to estimates released Thursday by Desjardins.<\/p>\n<\/div>\n

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The projection raises more questions about how Finance Minister Chrystia Freeland will meet her pledge to keep the country\u2019s budget shortfall at around $40 billion a year from now until 2026.<\/p>\n

\u201cI think it\u2019s going to be an exercise in creative accounting,\u201d Randall Bartlett, Desjardins\u2019 senior director of Canadian economics, who wrote the research note, said in an interview. \u201cThey either need to cut spending or increase revenues to make this work.\u201d<\/p>\n

A chorus of analysts and economists is warning that without tax increases or spending reductions, deficits are likely to rise amid slow economic growth.<\/p>\n

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I think it\u2019s going to be an exercise in creative accounting<\/p>\n

Randall Bartlett<\/p>\n<\/blockquote>\n

That has led to concerns from business groups that Freeland will boost corporate taxes when she unveils her budget on April 16. However, that would open up the government to further criticism that it\u2019s unfriendly to business, Bartlett said \u2014 and in any event, it wouldn\u2019t help with this year\u2019s fiscal crunch.<\/p>\n

\u201cThat hasn\u2019t been telegraphed and a retroactive tax on companies would be a hard sell \u2014 it\u2019s not conducive to a stable and predictable investment environment,\u201d he said.<\/p>\n<\/div>\n

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Instead, the paper suggests the government will unveil some \u201cunexpected savings\u201d to lower the deficit. It may also decide to sell assets, Bartlett said.<\/p>\n

The government\u2019s plan to launch a new program to help cover the costs of diabetes medication and birth control, along with potential increases in military spending, have yet to be accounted for, adding more risk to the fiscal outlook.<\/p>\n

\u201cConsistently running deficits to fund operating expenses, accumulating debt and pushing up against fiscal anchors puts Canada\u2019s fiscal credibility and triple\u2011A credit rating at risk,\u201d Bartlett said in the paper. Still, the country\u2019s position remains \u201cenviable\u201d compared to other advanced economies, which have higher debt burdens and are running larger deficits.<\/p>\n

\u201cCanada\u2019s one of the cleanest dirty shirts in the closet,\u201d he said.<\/p>\n

In a separate report released Thursday, economists at Toronto Dominion Bank also said that while the trend in expenditures suggests the government will run a deeper deficit this fiscal year, revenues are likely to be higher after better-than-expected economic growth at the start of 2024.<\/p>\n

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