Ontario's deficit jumps to $38.5-billion this year due to pandemic

Andrew Cummings
August 14, 2020

In March, the Progressive Conservative government had said the deficit would reach $20.5 billion by the end of 2020-2021, but Phillips said Wednesday the ongoing pandemic required billions more in spending. "The economic impacts of COVID-19 globally, and in Ontario, are still unfolding".

The COVID-19 pandemic continues to take a heavy toll on Ontario, the provinces's finance minister said Wednesday, as he announced the government has almost doubled its deficit projection to a record $38.5 million in just three months.

During the height of the pandemic, with more than a million people out of work in Ontario, provincial tax revenues dropped by $10.7 billion, largely owing to declines in personal income and corporate tax revenue, as well as lower income from the gasoline and fuel tax.

According to the province, private-sector forecasts on average, project Ontario's real GDP will decline by 6.6% in 2020.

When looking at previous economic downturns, it has taken between 24 to 88 months to return to pre-recession peak employment across the last three recessions, the release notes.

The snapshot of Ontario's public finances does reflect, however, the interaction between the provinces and the federal government during the pandemic.

Home resales in the province rose 56.6% in May and 67% in June, after declining for two consecutive months.

On March 25, the treasurer announced a $17-billion coronavirus plan, injecting $3.3 billion more into health care plus $3.7 billion for other supports.

The province's next fiscal update will be a multi-year provincial budget, to be delivered no later than November 15.

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