Canada's Federal Budget Deficit Could Total $90 Billion Over Trudeau's First Term: NBF

Posted: Updated:
Justin Trudeau, Canada's prime minister, looks on during a special session at the World Economic Forum (WEF) in Davos, Switzerland, on Wednesday, Jan. 20, 2016. Trudeau's first term could see a cumulative budget shortfall of $90 billion, National Bank Financial says. | Bloomberg via Getty Images

OTTAWA — The National Bank says the country's fading economic prospects could put the federal government on track to run $90 billion in deficits over the Liberals' four-year mandate.

In a report, the bank predicts the public books will sink deeper into the red due to the combination of a weakened economy and Liberal promises of billions in fiscal stimulus.

Report author Warren Lovely says if the bank's downgraded growth profile comes to pass then Ottawa could lose $50 billion in revenue over the next four years.

deficit projections

National Bank Financial's Warren Lovely projects deficits in the $25-billion range in each of the next two fiscal years, assuming the Liberals' stimulus spending. (Chart: NBF)

The Liberals have pledged to run deficits in the coming years in order to spend $17.4 billion over its first mandate on infrastructure projects — which they predict will create jobs and generate economic growth.

Since coming to power, however, the Liberals have shied away from their election vow to keep annual deficits under $10 billion as the economy continues to falter amid falling commodity prices.

The Liberals have also promised to balance the budget in the fourth year of their mandate — a goal Lovely says will be difficult to accomplish without tax hikes or spending cuts.

In November, Finance Minister Bill Morneau said the Liberal government had "inherited" a gloomier fiscal situation from its Conservative predecessors, including a $3-billion deficit forecast for the current fiscal year.

"Repeated downgrades to the national growth outlook have nonetheless dealt a heavy blow to the federal budget balance," Lovely wrote in his report, published Wednesday.

Earlier on HuffPost:

Suggest a correction

Around the Web

Deficits are a poor measure of Canada's fiscal prudence - The Globe ...

Canada's National Debt Clock : The Canadian Taxpayers Federation

Canada to present federal budget week of March 21 - sources

Sour economy could put Ottawa $90-billion in the hole over 4 years: study

The Bank of Canada's pro-deficit signals just got even stronger