Pandemic effect: Canada facing all-time high deficit of C$381 billion

Canada is facing an all-time record deficit of C$381.6 billion ($294.4 billion) due to measures taken by the government to counter the economic and social impact of the Covid-19 pandemic.

This was revealed in the Fall Economic Statement presented by Canada’s Deputy Prime Minister and finance minister Chrystia Freeland before the House of Commons.

Despite the high deficit, the government is preparing to spend up to an additional C$100 billion ($77.2 billion) to boost an economy that has been impact by the coronavirus crisis.

“This recession is worse than 2008,” the statement said, adding, “It stands to reason we will need to invest more, not less.”

The deficit is expected to touch C$381.6 billion by March next year. It could, however, increase as the country is now in the grip of a second wave of infections, sparking fresh curbs in some provinces.

An official statement issued by the country’s finance department said that once the virus is under control, the government will “invest in a growth plan” of about 3-4% of GDP, between up to C$70-100 billion over a period of three years to “jump-start” the country’s “recovery”.

“Time-limited investments will build Canada out of this recession towards an economy that is cleaner, more inclusive, more innovative and more competitive,” the statement added.

The statement quoted Freeland as saying, “We will do whatever it takes to help Canadians through this crisis. We will invest in every necessary public health measure. We will support Canadians and Canadian businesses in a way that is targeted and effective. And we will ensure the Canadian economy that emerges from this pandemic is greener, more inclusive, more innovative, and more competitive than the one that preceded it, with a stronger, more resilient middle-class.”

According to projections, the fiscal deficit will not return to pre-Covid-19 levels till 2026. It has also far outstripped the deficit recorded during the global financial crisis of 2008-2009.

The number of confirmed Covid-19 cases in Canada rose by 6,103 to reach 377,806, while the death toll is at 12,130.