close

Ontario’s deficit to quadruple to $41 billion due to coronavirus costs

Ontario’s deficit is expected to quadruple in 2020-2021 due to the partial economic shutdown associated with the COVID-19 coronavirus pandemic.
Jonathan Bradley Montreal, QC

Ontario’s deficit is expected to quadruple to $41 billion in 2020-2021 due to the partial economic shutdown associated with the COVID-19 coronavirus pandemic, according to a report by the Financial Accountability Office (FAO).

The FAO released their Spring 2020 Economic and Budget Outlook on Monday.

"The report shows that the partial shutdown of the Ontario economy due to the COVID-19 pandemic will deliver a severe blow to the province's revenues, increase spending, and result in substantially higher deficits and debt," said the FAO in a press release.

The report said the deficit will become the largest in Ontario's history. Ontario's previous record deficits were $19.3 billion in 2009-2010 and $12.4 billion in 1992-1993.

The report said the province's net debt-to-GDP ratio will jump to a record 48.7 per cent from 39.9 per cent.

"Even as the economy recovers through 2021, Ontario’s debt burden would remain elevated at 48.7 per cent of GDP next year," said the report.

Ontario's GDP is projected to decrease by 9 per cent in 2020, the largest annual decline on record.

Ontario's revenue is projected to drop by 14 per cent to $133 billion in 2020-2021, which is larger than the revenue decline during the 2008 global financial crisis.

The FAO claimed Ontario’s economic recovery will rely on "success of the pandemic containment measures and the pace at which the economy can be safely reopened."

"Assuming the pandemic shutdown is gradually eased through the summer, the FAO projects that Ontario’s economy will steadily strengthen into 2021, helping to reduce the budget deficit to $25.3 billion in 2021-22," said the report.

The FAO warns that if economic recovery takes longer than expected, the debt could increase more.

"There is significant risk that reopening the economy could take longer than expected due to continued public health concerns," they said. "If Ontario’s economic recovery is delayed, budget deficits and provincial debt would be much higher, pushing Ontario’s net debt-to-GDP ratio above 52 per cent next year."



Join us!

We’re independent and can’t be cancelled. The establishment media is increasingly dedicated to divisive cancel culture, corporate wokeism, and political correctness, all while covering up corruption from the corridors of power. The need for fact-based journalism and thoughtful analysis has never been greater. When you support The Post Millennial, you support freedom of the press at a time when it's under direct attack. Join the ranks of independent, free thinkers by supporting us today for as little as $1.

Thank You!

Support The Post Millennial
Accepted payment methods: Visa, Mastercard, American Express  and Paypal
Jonathan Bradley
0
Join The Discussion