Finance Minister Chrystia Freeland will table the next federal budget on April 16.
This will be filed in an atmosphere of economic gloom in the country, although inflation seems to have started a downward trajectory.
In January, Statistics Canada put the Consumer Price Index (CPI) at 2.9%, propelled first and foremost by the increase in housing costs (6.2%). This is the first time since June 2023 that inflation has been below 3%.
For its part, the Bank of Canada must announce this week whether it is maintaining the key rate at its current threshold of 5%. While many experts foresee a slight drop in the rate this year, it is not certain that we will see one before the budget is tabled.
- Listen to the interview with Emmanuelle B. Faubert, economist at the Montreal Economic Institute on QUB:
Minister Freeland will have to do a balancing act to succeed in maintaining, on the one hand, the promises of her minority government, kept in office through an alliance with the NDP, and on the other, her ambitions to present a fiscally responsible plan.
This alliance with the NDP has resulted in generous social programs, the most recent being that on drug insurance unveiled last week, which followed a vast dental care program announced the previous year.
These initiatives are not unrelated to the increase in the deficit, which should stand at 40 billion in 2023-2024. The federal debt now stands at 1.2 trillion, or more than a trillion dollars.
Exploding costs, inflation and interest rates have pushed debt costs to $58.7 billion by 2027-2028, according to government estimates.
Chrystia Freeland announced during last year’s budget a general slowdown in the pace of spending.
In the 2023 budget, Mme Freeland had planned cuts of around $15 billion over the next five years. Consequently, Treasury Board President Anita Anand ordered most government departments to trim the fat.