Freeland silent on meeting $40.1-billion federal deficit pledge

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Finance Minister Chrystia Freeland is promising her government has met its fiscal anchor of a declining debt-to-GDP ratio for the 2023-24 fiscal year, but would not confirm if it hit its deficit pledge, as it prepares to table its fiscal update on Dec. 16.

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“In next week’s fall economic statement, you will see that the government is maintaining its fiscal anchor, specifically reducing federal debt as a share of the economy over the medium term,” Freeland said, during a press conference in Ottawa on Tuesday. “I expect that the debt-to-GDP ratio projected in the spring budget for the fiscal year 2023-24 will be met.”

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In the spring budget, the federal government projected federal debt would be 42.1 per cent of GDP for 2023-2024, before declining to 41.9 per cent the following year.

In last year’s fall fiscal update, Freeland made three pledges for Canada’s finances. The fiscal anchors included keeping the deficit for the 2023-24 fiscal year at or below $40.1 billion, lowering the debt-to-GDP ratio in 2024-25 and keeping deficits below one per cent of GDP in 2026-27 and in future years.

The finance minister was pressed on whether the federal government has met its pledge to keep the deficit below $40.1 billion for the 2023-24 fiscal year but provided no details on where the deficit stands. In October, Canada’s budget watchdog — the Parliamentary Budget Officer (PBO) — issued a report that Canada had likely surpassed its deficit pledge by over $6 billion.

“If your debt is declining as a share of the economy, by definition, your fiscal position is sustainable and that is really important,” she said. “When it comes to the deficit, Canada has the lowest debt-to-GDP ratio and the lowest deficit in the G7 and that’s important too.”

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Freeland would not say whether the economic statement will include new spending measures. However, a number of new initiatives were announced by the federal government this fall, including a GST/HST holiday estimated by the PBO to cost $2.7 billion, if provinces ask for compensation on the HST.

The federal government has also made commitments to spend more on resources at the Canada-U.S. border.

“You can’t pick and choose fiscal anchors as you go, and renege on a commitment you made only a year ago,” said Robert Asselin, senior vice president of policy at the Business Council of Canada, in a statement. “The fact of the matter is this government is losing control of public finances and Canadians are noticing.”

• Email: jgowling@postmedia.com

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