MNI BRIEF: Budget Office Sees Canada Breaking Debt-GDP Anchor

Canada's Parliamentary Budget Office said Thursday increased spending and a slowdown from the U.S. trade war will lead Prime Minister Mark Carney to break a campaign promise of lowering national debt as a percentage of GDP.

That projection excludes the pledge to increase military spending to 5% of GDP. Also excluded is a plan to trim program spending by as much as 15% though experts tell MNI those savings are difficult to realize. 

The deficit for the fiscal year that began April 1 will be CAD69 billion, according to the PBO, instead of the CAD62 billion on the Liberal platform. The CD Howe Institute and La Presse newspaper put the deficit closer to CAD100 billion, a figure Finance Minister Francois-Phillipe Champagne has declined to comment on. (See: MNI: Carney Deficits Are Bulwark Against Big Macklem BOC Cuts)

Debt-to-GDP will rise from 41.7% in fiscal 2024-25 to 43.7% over the next four years "and is no longer projected to be on a declining path over the medium term" the PBO estimates.