Figures released Wednesday provide the first estimate of Ottawa’s bottom line since a December report that was released prior to the pandemic.
This translation has been automatically generated and has not been verified for accuracy.
The 168-page document includes a section aimed at making the case that the larger debt load is manageable in light of historically low interest rates. Ottawa intends to lock in these lower rates by increasing the percentage of debt that is issued through long-term bonds. The government notes the cost to service the federal debt will actually be slightly lower this year than the previous year.
The cause of the larger deficit is primarily due to a $71.1-billion decline in tax revenues, combined with $227.9-billion in direct spending and tax measures in response to COVID-19 and other adjustments to the fiscal forecast.The update states the the drop in federal revenues is the steepest since the Great Depression and twice as large as the decline that occurred during the 2009-10 global financial crisis.
The government’s projections are based on an average of private sector forecasts. Those average forecasts show the Canadian economy will shrink by 6.8 per cent in 2020.
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