On April 16, Deputy Prime Minister and Minister of Finance, Chrystia Freeland, presented her budget. We could read on page 25 that the deficit for the year 2023-2024 was $40 billion.
Unfortunately for Mme Freeland, the deficit for the last year is not 40 billion, but indeed 50.9 billion. We were able to learn the real extent of the deficit in the latest publication of The Financial Review This morning. We will have the final figures in the fall.
Let’s say that the Trudeau government looks bad, because Prime Minister Trudeau and the Minister of Finance were happy to tell us, in April, that last year’s deficits and this year’s deficits were not higher than expected.
Clearly, the M teamme Freeland was wrong.
Next budget
With the figures released by the Ministry of Finance today, we may wonder how Minister Freeland will be able to present a budget next year that will respect her famous debt-to-GDP ratio.
Furthermore, we can now have serious doubts about the deficits presented to us last April. If the Canadian Deputy Prime Minister underestimated the 2023-2024 deficit by 10 billion, did she also underestimate the deficits of the coming years?
The last budget was not an easy task for Mme Freeland and her team, therefore the next budget in spring 2025 is not likely to be more obvious, especially since she seems to have overestimated income (for example, capital gains).
Electoral consequences
The dismal state of public finances and the underestimation of the deficit will probably have an impact on the date of the next electoral campaign.
Can the federal Liberals present another budget with so much uncertainty? Moreover, with the numerous expenses and the room for maneuver which is non-existent, can Justin Trudeau go on the campaign and make new promises?
Mr. Trudeau says that if the Conservatives are elected, it will be a period of austerity, but if it continues like this, it is he who will have to cut back if he wants to give out candy during the next campaign.
