Ottawa Citizen

Budget deficits could total $90B over Liberals’ term

National Bank report blames weak economy, promises of fiscal stimulus

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The National Bank says the country’s fading economic prospects could put the federal government on track to run $90 billion in deficits over the Liberals’ four-year mandate.

In a report, the bank predicts the public books will sink deeper into the red due to the combinatio­n of a weakened economy and Liberal promises of billions in fiscal stimulus.

Report author Warren Lovely says if the bank’s downgraded growth profile comes to pass, the federal government could lose $50 billion in revenue over the next four years.

The Liberals have pledged to run deficits in the coming years in order to spend $17.4 billion over its first mandate on infrastruc­ture projects — which they predict will create jobs and generate economic growth. Since coming to power, however, the Liberals have shied away from their election vow to keep annual deficits under $10 billion as the economy continues to falter amid falling commodity prices.

The Liberals have also promised to balance the budget in the fourth year of their mandate — a goal Lovely says will be difficult to accomplish without tax hikes or spending cuts.

In November, Finance Minister Bill Morneau said the Liberal government had “inherited” a gloomy fiscal situation from its Conservati­ve predecesso­rs, including a $3-billion deficit forecast for the current fiscal year.

“Repeated downgrades to the national growth outlook have nonetheles­s dealt a heavy blow to the federal budget balance,” Lovely wrote in his report, published Wednesday.

 ?? ADRIAN WYLD/ THE CANADIAN PRESS FILES ?? Finance Minister Bill Morneau, speaking to reporters in Ottawa last November, said the Liberal government ‘inherited’ a gloomy fiscal situation from its Conservati­ve predecesso­rs.
ADRIAN WYLD/ THE CANADIAN PRESS FILES Finance Minister Bill Morneau, speaking to reporters in Ottawa last November, said the Liberal government ‘inherited’ a gloomy fiscal situation from its Conservati­ve predecesso­rs.

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