By In the latest fiscal year, Canada has reported a significantly smaller budget deficit compared to the previous year, surpassing its own projections. The Finance Department of Canada revealed that the budget deficit for the fiscal year 2022-23 amounted to CAD 35.3 billion or approximately $25.7 billion. This figure is notably lower than the projected deficit of CAD 43 billion initially anticipated in the Liberal government’s 2023 budget plan, released in March, and is also a substantial improvement from the CAD 90.2 billion shortfall experienced in the fiscal year 2021-22. The elevated deficit in the previous year was primarily attributed to pandemic-related spending, which has been scaled back since.
Factors Contributing to the Decrease
The reduction in the budget deficit for the 2022-23 fiscal year can be attributed to an 8.4% increase in revenue compared to the previous year. This growth can be attributed to robust employment gains and strong corporate earnings, particularly within the resource sector. Additionally, expenses relating to government programs and day-to-day operations saw a decline of 4.1%. However, it is worth noting that public-debt charges witnessed a significant rise of nearly 43% due to a rapid increase in interest rates.
Future Outlook
Finance Minister Chrystia Freeland is expected to provide an update on Canada’s public finances for the current fiscal year 2023-24 in the upcoming weeks. Initially, her 2023 budget plan forecasted a deficit of CAD 40 billion for the current fiscal year. However, according to a report from parliament’s budget watchdog, the projected deficit is estimated to reach around CAD 46.5 billion.
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