Prime minister back-pedalling on promise of balanced budget

OTTAWA — Prime Minister Justin Trudeau is backing away from a campaign vow to balance the public books before the end of his government’s four-year mandate — a pledge that was central to the Liberal election platform.

As a result of a weakening economy, the government’s upcoming 2016-17 budget plan will show a deficit larger than the Liberals’ promised $10-billion shortfall cap, Trudeau told La Presse newspaper.

Just how big that deficit will be remains unclear.

If the economy continues to deteriorate, it will be difficult for the Liberals to live up to their pledge to balance the books in 2019-20, Trudeau said in the interview published Thursday.

Less than two months ago, Trudeau insisted that the Liberal plan to make good on that balanced-budget promise was “very” cast in stone.

The doubts raised by Trudeau offer a glimpse of the fiscal pressure faced by the finance department as it crafts the government’s first federal budget, expected late next month.

“If we look at the growth projections for the next three or four years, it will be difficult (to return to balance),” Trudeau was quoted as saying. “But everything we’re doing is aimed at creating economic growth. When predicting the level of growth four years in advance, governments often miss the target.”

Trudeau said the Liberal government still intends to fulfil its other, more flexible “fiscal anchor” — lowering the debt-to-GDP ratio in every year of its mandate.