OTTAWA (Reuters) - Canada’s budget deficit is forecast to hit a historic C$381.6 billion ($293.9 billion) on COVID-19 emergency aid, with the federal government eyeing C$100 billion in stimulus to be rolled out once the virus is under control, the finance department said on Monday.
The forecast deficit is 11.2% higher than projected in July, mostly due to C$25.1 billion in new COVID-19 and recovery spending, along with higher-than-expected emergency support costs. Total federal debt is now set to top C$1.12 trillion this year.
“We are living through a very virulent second wave of the coronavirus and I think we all know winter will be difficult,” Finance Minister Chrystia Freeland told reporters.
“We have a plan to get through the winter, we have a plan to provide vaccines to Canadians, and we have a plan to build our economy back.”
Canada has spent C$1 billion on vaccine agreements to secure 429 million doses from seven candidates, the document showed.
Once the virus is under control, Freeland said the Liberal-led government will invest up to C$100 billion over three years to “jumpstart” the recovery.
The finance department did not include that money in its current fiscal framework, instead giving four scenarios for how it could be rolled out starting in fiscal 2021/22.
“Make no mistake: We commit to providing fiscal support until the economy is firmly back on track,” the government said.
The measures will be subject to a confidence vote, which means the Liberal-led minority administration would be toppled if it failed to gain enough support among legislators.
A government source though predicted “I don’t expect any type of electioneering,” given the importance of the measures being announced.
Reporting by Julie Gordon in Ottawa; additional reporting by David Ljunggren and Fergal Smith; editing by Steve Scherer, Leslie Adler, Jonathan Oatis and Tom Brown
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