Prime Minister Justin Trudeau will post a deficit of approximately $30 billion in his first budget in a few days, signalling he won’t unveil additional initiatives to kick-start the economy, government officials said.
The budget, to be sold March 22 by Finance Minister Bill Morneau, will mainly comprise pledges made during and also, since last year’s election, two governmental officials said on condition they not be identified since the plans aren’t yet public.
A $30 billion deficit could be triple what Trudeau campaigned on. However it’s consistent with a comment recently that pegged the baseline deficit at roughly $18.4 billion, before $10.5 billion in campaign spending pledged for the fiscal year that starts April 1.
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The cornerstone of Trudeau’s finances are likely to function as the Canada Child Benefit, a new social program that will boost direct gets in low-income families with children. It had been a hallmark of the prime minister’s election campaign. He’s also likely to deliver billions in new infrastructure funding over the next four years, another campaign pledge.
In a job interview this month, Trudeau ruled out significant new stimulus funds, citing partly the need to be cautious as the country moves deeper into deficit. He and his team have consistently said the country needs investment, but even while oil and the currency dropped in the early weeks in power they have avoided framing it as a stimulus package.
“I don’t think we need massive stimulus,” Trudeau said in the March 2 interview. “What we need are smart investments that will assist the economy and the families who need it for the short term while creating a path toward greater growth and greater prosperity in the longer term.”
A $30 billion deficit would be 1.5 percent of gross domestic product. That’s a swing of just one.4 percentage points, from an expected deficit of 0.1 percent of GDP in the present year. Since the end of World War II, there has been only four one- year expansionary fiscal swings of more than 1.4 percentage points of GDP.
Bloomberg News
