(Ottawa) Finance Minister Chrystia Freeland refuses to give a precise timetable for a possible return to a balanced budget in Ottawa. Since the Liberals took power in 2015, the federal government has accumulated deficit budgets.
Posted at 2:10 p.m.
Hounded on this subject by Conservative MP Ed Fast on Monday during his testimony before the House of Commons Finance Committee, Ms.me Freeland said his latest budget presented on April 7 is a “responsible” budget plan that calls for gradual deficit reduction over the next few years.
But the minister was careful not to say when the red ink will stop flowing in Ottawa.
“One of the strengths of this budget is the clear fiscal responsibility. We are reducing the deficit. We are also reducing the debt to GDP ratio. I would also like to point out that Standard & Poor’s has confirmed Canada’s AAA rating,” said Ms.me Freeland.
Irritated, MP Ed Fast said his question was not about the federal government’s credit rating, but about returning to a balanced budget. “You are the finance minister. You should have an answer to that question,” he said.
“I gave a very clear answer. This is an important issue for Canadians. The budget should present a clear fiscal plan. The deficit is being reduced. We have the lowest debt-to-GDP ratio of any G7 country. A rating agency has confirmed our credit rating,” she said again.
After recording a record deficit of $327.7 billion in 2020-2021 due to the pandemic, the federal government had to deal with a shortfall of $113.8 billion during the last fiscal year which ended on March 31.
In her latest budget, Minister Freeland predicts that this financial burden will reach $52.8 billion in 2022-2023, and will continue to decrease over the following fiscal years ($39.9 billion in 2023-2024, $27.8 billion in 2024-2025, 18.6 billion in 2025-2026 and 8.4 billion in 2026-2027).
But these projections do not take into account the major expenditures that are planned for the Canadian Armed Forces and National Defense over the next few years, nor an increase in health transfers to the provinces and any amount for the creation of a national pharmacare program. Result: red ink could continue to flow for several years to come, hence Minister Freeland’s caution in specifying a date for returning to balanced budgets.
During her testimony, the Minister of Finance praised the good performance of the Canadian economy, stressing that Canada had more than recovered the jobs that had been lost during the COVID-19 pandemic. As proof, the unemployment rate reached a historic low of 5.3% in March, the minister insisted.
Mme Freeland also said the IMF expects Canada to have the strongest economic growth of the G7 countries this year and in 2023.
“We still have challenges ahead of us. Inflation is a global phenomenon that makes the prices of goods higher. Supply chain issues have raised prices. Russia’s barbaric invasion of Ukraine is contributing to rising food and energy prices here and around the world. It impacts the most vulnerable,” she offered.