Ontarios Projected Deficit to Nearly Double to $29 Billion

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Doug Ford.

Photographer: Cole Burston/Bloomberg

Photographer: Cole Burston/Bloomberg

Ontarios deficit will be nearly twice as large as it projected in March as the government bolsters measures to cushion the economy from the coronavirus pandemic.

Premier Doug Ford‘s administration is projecting a deficit of C$38.5 ($29.1 billion) for the 2020-2021 fiscal year, up from an estimated shortfall of C$20.5 billion, according to documents released Wednesday by the finance department. Canada’s largest provincial economy is planning C$30 billion of virus-related measures, up from C$17 billion.

The government will do “whatever is necessary to respond to Covid-19,” Finance Minister Rod Phillips said in a televised press conference. “The economic impacts of Covid-19 globally and in Ontario are still unfolding.”

Ontario‘s rising deficit follows the path of other governments, including the federal government of Justin Trudeau, in projecting historically high levels of borrowing. Ontario’s economy is expected to shrink this year 6.6%, according to consensus of analysts. The government is using an estimate of a 6.7% decline in its planning, revised from an earlier projection of zero growth.

The province is also increasing its estimated total funding requirements to C$66.7 billion, up from earlier estimates of C$49.7 billion. The portion to be raised from long-term borrowing will rise to C$52.1 billion compared to C$43.6 billion.

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The pandemic will cut deeply into Ontarios tax revenues, which are seen at C$150.6 billion down from C$156.3 billion, according to the documents. Total expenses are projected at C$186.7 billion up from C$174.3 billion.

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“While the current level of government spending and deficits are not sustainable over the long run, they are necessary today to respond to the health crisis,” said Phillips.

(Adds Finance Minister comments in third paragraph)