Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
Canada's budget swung into deficit in the first two months of the fiscal year as program expenditures surged 15%, the finance department reported Friday, a result coming amid government claims its fiscal modesty is helping set conditions for the central bank to lower interest rates.
The deficit for April and May was CAD3.9 billion versus a CAD1.5 billion surplus in the previous period according to the department's Fiscal Monitor. Public debt charges rose 34% reflecting the central bank's campaign of 10 interest-rate hikes and higher global bond yields.
Finance Minster Chrystia Freeland's spring budget projected a CAD39.8 billion deficit in the fiscal year that began April 1 or 1.3% of GDP, pledging another new "fiscal anchor" of keeping shortfalls below CAD40 billion. Experts have told MNI that ahead of an election due late next year the Liberals may bring in major new spending. (See: MNI INTERVIEW: Canada Budget Leans To Largesse - CFIB's Kelly)
Since the budget, the government has announced new spending commitments including a plan to boost military spending to 2% of GDP by 2032 to meet a NATO target.
Canada hasn’t run a substantial surplus since 2008, though the country has kept triple-A credit ratings with small deficits as a share of GDP. The government projects the deficit will fall below 1% of GDP in two years and remain below that mark, while debt as a share of GDP falls over each of the next five years.
Program spending continues to grow faster than the economy's potential. BOC Governor Tiff Macklem has said major fiscal expansion could make the inflation fight a bit harder, though he's now cut interest rates twice as core prices settle down.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.