Ottawa / Bloomberg
Finance Minister Bill Morneau said economic conditions will make it difficult for the new Liberal government to meet a campaign pledge to balance the budget by the end of its mandate.
Morneau, speaking to reporters in Ottawa, said the government’s main objective is to bolster growth in the economy while seeking to balance the budget in the longer-term. He was asked specifically if he intends to balance the books within the four-year mandate.
“Our goal is to make sure that we make these investments, that we do it prudently and that we focus on a way to get to a balanced budget over time, recognizing that in this economic environment, that it will be more challenging,” Morneau said.
It’s the biggest indication yet that a deteriorating economic outlook will force Prime Minister Justin Trudeau’s government to renege on another fiscal promise, after already abandoning a pledge to cap annual deficits at C$10 billion ($7.2 billion).
Freeing themselves from the balanced budget pledge effectively gives them more scope to run larger deficits over the next couple of years. Economists surveyed by Bloomberg estimate the deficit will range between C$20 billion and C$35 billion in the fiscal year starting April 1. About C$10 billion reflects the fiscal impacts of slower-than-expected growth.
During the election campaign, the Liberals laid out three main fiscal promises: annual deficits of no more than C$10 billion, balancing the budget in four years and reducing the debt-to-GDP ratio every year.
“He’s giving himself permission to fail at the end of four years,” Conservative lawmaker Lisa Raitt said of Morneau’s comments on Tuesday.