Federal deficit could reach $252B, budget officer warns

OTTAWA — The federal deficit for the year could top $252.1 billion as a result of the COVID-19 pandemic, Parliament’s budget watchdog predicted in a report that warned the figure could go even higher if emergency measures remain in place longer than planned.

The figure is an estimate based on the almost $146 billion in spending measures the government has announced to help cushion the economic blow from the pandemic, as well as estimated declines in the country’s gross domestic product and the price of oil remaining well below previous expectations.

Parliamentary budget officer Yves Giroux’s report on Thursday noted that the annual deficit as a share of the national economy would be the largest on record since the late 1960s, as his team expects the economy is set to contract by 12 per cent — a rate not seen since 1961.

So far, more than seven million people have received federal emergency aid through the Canada Emergency Response Benefit, which has paid out more than $25.6 billion in benefits, based on the latest federal figures.

Giroux said the program could end up costing $35.5 billion, and could reach 8.5 million people whose income has all but dried up. He estimated that a highly anticipated wage subsidy program that begins payments next week could end up paying out $76 billion, above the $73 billion already budgeted.

What it added up to was a debtto-GDP ratio — the Liberals’ favoured fiscal anchor — that could jump to 48.4 per cent under the scenario Giroux envisioned, and begin to fall again as spending unwinds. “But if some of the measures are extended or made permanent, the federal debt ratio will keep rising,” Giroux said.

The Liberals have said they’ll spend what is needed to bridge the country through the crisis.