Pandemic to plunge deficit to $363B, PBO says

Parliament's spending watchdog says the federal response to the COVID-19 pandemic should send the deficit to $363.4 billion.

In a report this morning, budget officer Yves Giroux says the deficit should fall over time as emergency spending measures wind down over the next 12 months.

PBO will release its legislative costing note “Increasing the maximum number of EI regular weeks of benefits” on March 31, 2021. #cdnecon #cdnpoli

— Parliamentary Budget Officer (@PBO_DPB) March 30, 2021

The economy too is faring better than Giroux anticipated, and his office has revised its projections for economic growth starting in the second half of this year.

With the economy doing better than expected, and the deficit falling over time, the budget office expects federal finances to become sustainable again.

The economy could also get a boost from the Liberals' promised fiscal stimulus that is valued between $70 billion and $100 billion over three years to be outlined in this year's federal budget.

Giroux's outlook doesn't account for that spending because of the lack of detail about how it will be used, but he does warn it would result in larger deficits that may spin out of control depending on how the spending is financed.