Finance Minister Chrystia Freeland appears as a witness at a Senate committee on national finance, in Ottawa, on Dec. 7, 2022.Sean Kilpatrick/The Canadian Press
The federal deficit stood at $3.6-billion as of November with just four months left in the 2022-23 fiscal year, suggesting federal finances are outperforming official projections.
The Finance Department’s monthly fiscal monitor report said the $3.6-billion deficit for the April to November period compares with a $73.7-billion deficit during the same eight months one year earlier.
The report said the federal government ran a $3.4-billion deficit in the month of November alone, compared with a $1.4-billion deficit in November, 2021.
The federal government typically posts larger monthly deficits toward the end of the fiscal year. Nonetheless, the $3.6-billion deficit for the fiscal year to date suggests the size of this year’s deficit is on pace to be smaller than the federal government’s most recent projections.
Finance Minister Chrystia Freeland’s Nov. 3 fall economic statement projected a $36.4-billion deficit for the current 2022-23 fiscal year. The document also provided a “downside scenario” in which the deficit could be $49.1-billion if various economic risks materialized.
At a cabinet retreat in Hamilton this week, Associate Finance Minister Randy Boissonnault said the fiscal track remains within those two projections, but he did not specify whether he was speaking about the current fiscal year or the longer-range projections.
The fall economic statement was based on an average of private sector forecasts. Specifically, it used a forecast of 3.2 per cent GDP growth in 2022 and 0.7 per cent in 2023.
The Bank of Canada’s latest Monetary Policy Report, released Wednesday, showed the bank has revised its GDP forecast upward for this year and next. The bank now expects 3.6 per cent growth in 2022 and 1 per cent growth in 2023.
Bank of Canada Governor Tiff Macklem told reporters this week that the bank expects the Canadian economy to slow at the end of 2022 and to stall through the middle of 2023. He said that could mean a mild recession in 2023.
Former Bank of Canada governor David Dodge co-authored a report this week in which he urged the federal government to keep new spending under control during a challenging period of higher-than-normal inflation.
Ms. Freeland responded to those concerns by saying the coming 2023 budget will be fiscally prudent. She also said the government will need to address calls for increased spending on health care and the green energy transition.
The House of Commons resumes siting on Monday. Prime Minister Justin Trudeau has scheduled a first ministers meeting for Feb. 7 to discuss the future of health care transfers with provincial and territorial premiers.
Federal ministers have said the goal is to reach specific transfer deals with each province and territory shortly after that meeting so that both Ottawa and the premiers have a clear sense of their finances before tabling their 2023 budgets.
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