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'Not unthinkable' that Canada's debt could hit $1 trillion this fiscal year, PBO says
OTTAWA -- Parliamentary Budget Officer Yves Giroux says it's "not unthinkable" that the federal debt could reach $1 trillion during this fiscal year as the economic response to the COVID-19 pandemic continues.
Giroux made the comment during Tuesday's finance committee meeting, when Conservative MP Pierre Poilievre asked whether it was "possible or realistic" that the federal debt could reach $1 trillion dollars during this fiscal year.
"Possible, yes. Realistic? Yes. Certainly not unthinkable," replied Giroux.
The comment comes two weeks after Giroux also predicted that the federal deficit for the year could reach over $252 billion as a result of the emergency economic programs the government has put in place to help Canadians cope with job and income losses amid the outbreak, if existing business shutdowns are slowly eased from the summer through December and oil prices remain low.
On Tuesday, he said this figure was "optimistic."
"The figure of $252 billion is very likely to be the very optimistic scenario, as opposed to the number for the deficit for the current fiscal year," Giroux explained.
He said the measures the government has been announcing are intended to be temporary, and that once programs such as the Canada Emergency Response Benefit and the wage subsidy expire and the economy recovers, Canada's debt-to-GDP ratio should "stabilize."
"However, if some of the measures are extended or are made permanent, the federal debt ratio could keep rising," Giroux warned.
When pressed on Canada’s plan for its economic recovery, Prime Minister Justin Trudeau has not given reporters any indication of what steps will be taken to heal the bruised economy and shrink the rising deficit.
"There will be time after this is all done as we figure out how exactly this unfolds, where we will have to make next decisions on how that recovery looks," Trudeau said during a news conference on April 30, the day the initial $252-billion figure was released from the PBO's office.
"But right now our focus is on getting through this together as a country."
However, Giroux said there is something the government can do now to help with forecasting economic damage and understanding the steps that will need to be taken in the path to economic recovery. He wants the government to provide a fiscal update.
"The government probably has in mind a sense of how much it wants to spend on potential stimulus measures, but we don’t have that information," Giroux said.
On May 4, when Trudeau was pressed about whether the government will provide its budget anytime soon, he said the government has no timeline for sharing that kind of fiscal information at the moment.
"We'll find ways to share this with you but we have not yet been able to determine what the best way is of looking at a budget or an economic update or maybe another way of sharing information with Canadians about what we foresee for the months to come," Trudeau said.
However, he did say the government is open to different ways of communicating economic information with Canadians.
"Nothing is off the table," Trudeau said.
With files from The Canadian Press