Economic update: federal deficit higher than expected this year

Mise à jour économique: déficit fédéral plus élevé que prévu cette année

The minister of Finance Bill Morneau believes that its approach of investing for growth is the right one.

December 16, 2019 11h09

Updated at 23h07

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Economic update: federal deficit higher than expected this year

Catherine Lévesque

The canadian Press

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OTTAWA — The economic update the federal government is projecting a deficit higher than expected, which is expected to decrease by more than half within five years.

This prudence announced, however, raises questions about the ability of Ottawa to fulfill its promises and meet the needs of both the opposition parties in the provinces.

The budget estimates of Ottawa unveiled Monday forecast a deficit of 26.6 billion dollars, or nearly seven billion more than announced in the last budget.

The deficit is expected to widen further to $ 28.1 billion in 2020-2021, and then decreased gradually up to $ 11.6 billion by 2024-2025.

But no such promise does not appear in the document, except the tax relief that was tabled last week.

The projections show a Transfer under the canada health which is expected to increase from 40.4 billion $ 2019-2020 48.6 billion $ in 2024-2025.

If these numbers are realized, this would be an increase of slightly more than 3% per year, while the provinces and territories are seeking an increase of 5.2 % per year. The minister Morneau has to meet with his provincial and territorial counterparts on Monday night and Tuesday.

Asked about their demand to increase health transfers, Mr. Morneau contends that he has hearing what the ministers of Finance have to say to him. “We are going to consider their opinion, but at the same time, we must consider the totality of the situation,” he said.

Healthy economy

The minister Morneau is confident that its approach of investing for growth is the right one. He said he is confident of being able to keep the AAA credit rating of Canada.

“With our balance sheet, we are in a good position now, but at the same time, we will continue with our approach to reduce our level of debt relative to our economy in the future,” he explains.

These explanations have not convinced the conservatives, who want a return to a balanced budget.

Their spokesman in matters of Finance, Pierre Poilievre, is sceptical about the planned reduction of the deficit, since the economic forecasts do not contain costly promises encrypted, such as the implementation of a drug insurance.

Gabriel Ste-Marie, the Bloc quebecois, rejects the fear-mongering of the conservatives, but expressed concern about the increase in the deficit.

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MORNEAU OPENED TO A NEW FISCAL PACT WITH THE PROVINCES

The liberals, Trudeau has opened the door on Monday to change the way the federal government determines financial aid that it grants to the provinces in financial difficulty. An announcement that preceded the scheduled talks between the Finance ministers of the country.

The federal minister Bill Morneau, however, has been clear about the fact that no decision would be taken before the beginning of the talks, on Monday evening, and that it would depend on the answers to the other concerns raised by its provincial and territorial counterparts.

Already, the federal government has heard of the objections on how Ottawa calculates how much money to send to the provinces and territories in so-called less fortunate.

Five provinces will receive payments during the fiscal year that begins in April. Figures published just before a supper of labour between all the ministers provide for transfers of nearly $ 20.6 billion shared between l’île-du-Prince-Édouard, Nova Scotia, New Brunswick, Manitoba, and Quebec. Due to its population much larger, it is Quebec that must receive the lion’s share, or about $ 13.3 billion $.

Mise à jour économique: déficit fédéral plus élevé que prévu cette année

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