Canada to present fiscal snapshot of domestic economy
Canadian Finance Minister Bill Morneau is set to today release a ‘snapshot’ of the country’s current fiscal and economic position as the COVID-19 pandemic’s effects come into focus.
As current fiscal stimulus measures are being extended, concerns over budget deficits and debt management have grown in Ottawa. Thus far, Prime Minister Trudeau’s government has spent $118 billion on aid programs, including the Canada Emergency Response Benefit (CERB), the cornerstone wage subsidy program. The program represents a large portion of the $185 billion budget deficit the government is expected to run this fiscal year—its largest since records began in 1961.
Conservative lawmakers have called for new incentives that will motivate people to return to work, enhanced budget scrutiny and greater clarity on the government’s recovery plan.
Today’s announcement will frame Trudeau’s efforts to contain the economic damage wrought by COVID-19 thus far and indicate if there is political appetite for continued state intervention should the pandemic worsen. Trudeau has expressed trepidation towards reopening the economy too soon and signalled additional fiscal stimulus might be needed if businesses were kept closed for an extended period. If today’s update is disappointing, particularly if the budget deficit is worse than expected, expect pushback from conservative lawmakers over further extending fiscal aid. Also expect limited medium- to long-term economic projections from the government that are traditionally provided in budget announcements.
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