The Liberal government’s budget deficit for 2023-24 is expected to reach a whopping $46.5 billion, according to the latest report from the Parliamentary Budget Officer (PBO).
This is $6.4 billion higher than the projection made by Ottawa when it presented this year’s budget in April.
The PBO attributes the increase to new spending measures announced by the federal government since then, which amount to $28.6 billion over six years. The measures include a $13 billion investment for a Volkswagen EV plant, $16 billion for a Stellantis EV battery plant and the GST rental rebate.
According to the PBO the Canadian economy will experience zero growth in the second half of 2023, as the Bank of Canada maintains high interest rates to curb inflation.
Consumer spending is projected to remain weak until mid-2024, while real GDP is expected to contract by 0.2 per cent in 2023.
The Canadian Taxpayers Federation (CTF) has criticized the government for its fiscal management and called for immediate spending cuts in response to the report.
CTF federal director Franco Terrazzano said that the government is wasting money on interest charges and increasing the cost of living while the debt burden for future generations grows further.
“As bad as the budget was, the independent budget watchdog is showing that federal finances are in even worse shape,” said Terrazzano.
“The Trudeau government continues to mismanage our finances and that means more money wasted on interest charges, higher cost of living and more debt that Canadians’ kids and grandkids will have to pay back.”
The PBO projects that the federal debt-to-GDP ratio will rise to 42.6 per cent in 2023-24, up from 40.9 per cent in 2022-23.
“The feds have already blown through their budgeted deficit projection by more than $6 billion and we’re only halfway through the budget year,” Terrazzano said.
“And the government’s been solemnly signalling the bond rating agencies that it would get the debt-to-GDP ratio going down, but the PBO shows it’s going up.”
