A better budget situation than expected in Canada

As a result, the federal and provincial governments have all seen an improvement in their deficit estimates for 2021-2022, but Desjardins found that the use of these tax men by the governments varied greatly.

Some have chosen to put a side in anticipation of more difficult periods, while others have spent it all.

Desjardins expect economic activity to be even weaker than what most governments expect for next year and beyond. This means that some of them may be facing a more difficult budget situation than they had planned.

“With real gross domestic product (GDP) growth, inflation and labor market indicators exceeding expectations in early 2021, it is not surprising that revenues have been raised, the analysis says. Expenditures were also lower than expectations, albeit more modestly, especially in the areas with the most tightly linked to the economy such as the measures linked to the COVID-19. »

Due to favorable economic winds, the budget deficits of the 2021-22 exercise should now be universally lower than those initially projected during the 2021 budget season.

Some provinces, such as Alberta, Quebec and New Brunswick, plan to accumulate operating surpluses. Others, such as Manitoba, Saskatchewan and Newfoundland and Labrador, could report less significant deficits in 2022-2023 than in the previous exercise. These deficits are divided into deficit financing
of exploitation and capital investments.

Finally, Ontario, British Columbia, New Scotland and the Prince-Edouard Islands all anticipate more significant budget deficits in GDP percentage this year than during the 2021-22 exercise, which will lead to an increase in the ratio of net debt to GDP, Desjardins said.

In terms of total public debt, Canada has the lowest net-GDP ratio in the G7, the analysis notes. “And even if it was even higher than before the pandemic, Canada’s total public debt position continues to compare very well to that of other major advanced economies. »

This idea was reinforced when Standard & Poor’s reaffirmed the Canadian government’s AAA credit rating with a stable outlook by the end of April 2022.

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