Freeland doesn’t commit to meeting her own deficit target in fall economic statement

Finance Minister Chrystia Freeland is facing scrutiny over the government’s fiscal targets as the Liberal government prepares for an upcoming federal election. In a news conference, Freeland hinted at the possibility of not meeting the $40.1 billion deficit target set last year, signaling a shift in the government’s approach to spending.

Freeland emphasized the importance of maintaining a declining debt-to-GDP ratio in the fall economic statement, which is set to be presented on Dec. 16. While she expressed confidence in meeting the 42.1 per cent debt-to-GDP ratio projected for the 2023-24 fiscal year, she remained ambiguous about the deficit target.

The finance minister’s reluctance to confirm meeting the deficit target has raised concerns among economists and industry experts. The parliamentary budget officer projected a deficit of $46.8 billion for the 2023-24 fiscal year, indicating a potential deviation from the government’s initial fiscal plan.

Robert Asselin, a senior vice-president at the Business Council of Canada, criticized the government for “losing control of public finances” and accused them of reneging on previous commitments. Freeland defended the government’s fiscal position by highlighting the declining debt-to-GDP ratio as a sign of sustainability.

The fall economic statement is expected to focus on housing, affordability, and economic growth, with Housing Minister Sean Fraser announcing proposals to support homeowners. One notable proposal includes doubling the loan limit for homeowners looking to add a secondary suite to their property, offering 15-year loan terms at a two per cent interest rate.

In a bid to address affordability concerns and win back support from Canadians, Prime Minister Justin Trudeau announced measures to reduce costs for families during the holidays. The government proposed sending $250 payments to Canadians who worked in 2023 and earned less than $150,000, although the proposal’s feasibility remains uncertain without opposition party support.

As the Conservatives maintain a lead over the Liberals in public opinion polls, the government’s strategic spending decisions leading up to the federal election will be crucial. With the next election scheduled for October 2025, the government faces pressure to balance economic growth with fiscal responsibility in a highly competitive political landscape.