Deficits as Far as the Eye Can See: Canada’s Two-Year Government Outlook—April 2021

The Conference Board of Canada, 13 pages, April 28, 2021
Issue Briefing
(You must be signed in and entitled to rate this report)

This quarterly economic forecast presents the medium-term outlook for the Canadian economy. This release focuses on government. For an overview of all major components of the economy, go to the Canadian Outlook main page.

Document Highlights

  • The federal government spent an estimated $280 billion in 2020 on recovery measures, primarily income support programs. New spending initiatives are also planned for 2021–22.
  • Combined with the drop in tax revenues, these measures caused the deficit to balloon to north of $385 billion last year, which is by far the largest in the country’s history. Deficits will start to decline as financial support eases, but the federal government will remain in the red throughout the medium term.
  • The federal government should be in a position to finance its massive debt, as interest rates are expected to remain at rock-bottom levels until the early part of 2023. There are some upside risks to the interest rate outlook, however, as yields on longer-term bonds have crept higher recently.
  • Provincial governments will struggle to rein in their deficits over the next five years. The outlook is bleakest for Newfoundland and Labrador due to its declining population and weaker gains in oil royalty revenues.
  • The combined federal and provincial government net debt as a share of GDP will approach 100 per cent toward the end of the forecast period. Despite this, the federal government has managed to maintain its AAA rating with most of the major bond rating agencies. The same cannot be said for the provinces.
  • Some cities are in for a tough time. While federal transfers have offset revenues lost during the pandemic, many larger cities face the ongoing consequences of lost revenue from public transportation, as remote working is expected to endure beyond  the pandemic.

Table of Contents

Key findings

Government snapshot


Unprecedented stimulus from the federal government

Provinces and cities in even worse fiscal shape than the feds


COVID-19: Get all the insights

To see if you are entitled to get this research for free, take a minute and create a free e-Library account. This will let us determine if someone else at your organization has already purchased access to this material.

Browse by...
Need Help?