MNI POLICY: Canada Apr-Jan Budget Deficit is Record CAD268B

Canada's federal budget deficit was a record CAD268 billion from April to January, the finance department reported Friday, keeping it on track for a projected CAD382 billion shortfall over the full fiscal year.

The deficit widened another CAD20 billion in the month of January, versus a surplus of CAD400 million in the year-ago month.

Program spending from April to January surged 84% to CAD474 billion led by emergency relief measures to ease the Covid-19 pandemic, while revenue fell 15% to CAD236 billion.

It's the last monthly snapshot before Finance Minister Chrystia Freeland's April 19 budget, the Liberal government's first in more than two years, an unprecedented lag in delivering a full fiscal plan. There has been some speculation Prime Minister Justin Trudeau could use the budget to launch a snap election seeking to turn his minority government into a majority, though at a time when Canada is lagging the U.S. and other nations in delivering vaccines.

"This is going to be a budget about getting Canada and Canadians back to work, fulfilling the commitment in the Speech from the Throne to help support one million jobs, and help Canada heal the economic wounds of Covid-19," Finance Minister Chrystia Freeland said at a Thursday press conference in response to a question from MNI.

The IMF and business groups who have spoken to MNI have cautioned her rough plan to spend another CAD70 billion to CAD100 billion restoring the economy over three years may not be effective. The Liberals have discussed launching new social programs such as national childcare and broader public funding for prescription drugs, as well as projects to curb climate change.

Still, government bond yields remain near historic lows and the government has also boosted its cash reserves to CAD74 billion, suggesting little near-term strain from borrowing. The federal debt however has grown to CAD993 billion from CAD721 billion last March.