TD Bank expects Canada to run larger deficits over next five years — $16B more — than Trudeau budgeted
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http://business.financialpost.com/n...-to-run-larger-deficits-than-trudeau-budgeted
Canada will run larger deficits than Prime Minister Justin Trudeau’s government has projected amid a weakening revenue outlook, limiting its scope for additional spending measures, according to a report from Toronto Dominion Bank.
The country is on track to run a deficit of $34 billion in the current fiscal year, almost $5 billion more than forecast in the government’s March budget, the report calculated. Over the next five years, Canadian deficits are tracking $16 billion more than forecast.
TD’s fiscal estimates suggest the revenue outlook is worse than even the very conservative projections made by Finance Minister Bill Morneau in his budget, and will limit his ability to ramp up additional spending. Morneau met Thursday with private-sector economists as he prepares his fiscal update.
We would caution against implementing additional measures that would drive the deficit profile significantly above the status-quo,” the TD report said.
TD said nominal gross domestic product is growing at a pace of 3 per cent to 3.5 per cent through 2020, roughly one percentage point lower than the government’s budget estimates. That represents an annual loss of about $10 billion in revenue by 2020.
Lower interest rates also have mixed impact, the report found. While lowering public debt charges, lower rates also increase pension liabilities for the federal government, which Toronto Dominion Bank estimated at $3 billion per year.
The bank doesn’t project debt-to-GDP ratios to move much beyond 32 per cent over the next five years.
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How to increase revenue?
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http://business.financialpost.com/n...-to-run-larger-deficits-than-trudeau-budgeted
Canada will run larger deficits than Prime Minister Justin Trudeau’s government has projected amid a weakening revenue outlook, limiting its scope for additional spending measures, according to a report from Toronto Dominion Bank.
The country is on track to run a deficit of $34 billion in the current fiscal year, almost $5 billion more than forecast in the government’s March budget, the report calculated. Over the next five years, Canadian deficits are tracking $16 billion more than forecast.
TD’s fiscal estimates suggest the revenue outlook is worse than even the very conservative projections made by Finance Minister Bill Morneau in his budget, and will limit his ability to ramp up additional spending. Morneau met Thursday with private-sector economists as he prepares his fiscal update.
We would caution against implementing additional measures that would drive the deficit profile significantly above the status-quo,” the TD report said.
TD said nominal gross domestic product is growing at a pace of 3 per cent to 3.5 per cent through 2020, roughly one percentage point lower than the government’s budget estimates. That represents an annual loss of about $10 billion in revenue by 2020.
Lower interest rates also have mixed impact, the report found. While lowering public debt charges, lower rates also increase pension liabilities for the federal government, which Toronto Dominion Bank estimated at $3 billion per year.
The bank doesn’t project debt-to-GDP ratios to move much beyond 32 per cent over the next five years.
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How to increase revenue?
