Finance Minister Chrystia Freeland on Tuesday would not say whether the Liberals kept a pledge to cap the budget deficit at $40.1 billion in the previous fiscal year, but said the upcoming fall economic statement will show Ottawa’s balance sheet remains on a “sustainable” track.
When Freeland tabled the 2024 federal budget in the House of Commons in April, she highlighted “three very specific fiscal guideposts” that were underpinning “a responsible economic plan.”
Those guideposts were capping the federal deficit at $40.1 billion and maintaining both a declining debt-to-GDP ratio and a deficit-to-GDP ratio.
“In this budget, each one of these objectives is being met, as is our fiscal anchor — a declining federal debt-to-GDP ratio over the medium term,” she said while tabling the budget.
Freeland told Global National’s Dawna Friesen after tabling the budget in April that credit rating agencies would be looking at those three guideposts to gauge whether Ottawa was, as she called it, “charting a responsible path.”
“The ratings agencies said they would be looking at those to see whether Canada was sticking to that path. We have hit every single one of those markers,” she said at the time.
When Freeland was asked on Monday about her pledge to cap the annual deficit at $40.1 billion in the previous fiscal year, she would not answer directly and said she “chose (her) words with care.”
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Instead, she touted the federal debt-to-GDP ratio as the marker of sustainability.
“Our fiscal anchor is the debt-to-GDP ratio and a declining debt-to-GDP ratio. And that is so critical because that is really a way of saying our public finances are sustainable,” Freeland told reporters.
“If your debt is declining as a share of the economy, by definition, your fiscal position is sustainable.”
In Budget 2024, the Liberals projected the debt-to-GDP would come in at 42.1 per cent for fiscal 2023-24 and decline over the remaining years in the forecast horizon.
Canada’s fiscal watchdog, the parliamentary budget officer, also charged back in October that the Liberals likely surpassed the $40.1-billion deficit cap.
Some economists have told Global News that spending commitments announced since the 2024 federal budget have likely put pressure on Ottawa’s coffers heading into the fall economic statement.
The fiscal update comes later than in previous years, with Freeland blaming an ongoing Conservative filibuster stymying the usual business of the House of Commons through much of the fall sitting.
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