Finance Minister Bill Morneau announced a $343.2 billion deficit for the federal government, largely in part due to COVID-19 recovery measures. (Needpix)

By NanaimoNewsNOW Staff

MASSIVE DEFICIT

Government posting $343 billion deficit, record debt-load from COVID-19 spending

Jul 8, 2020 | 11:57 AM

OTTAWA — Canada is facing a budget deficit of $343.2 billion, in large part due to recovery programs linked to the COVID-19 pandemic.

Finance Minister Bill Morneau unveiled an economic and fiscal snapshot in Ottawa on Wednesday, July 8, showing the impacts billions in government aid during the pandemic had on government coffers.

According to the report, $212 billion in direct federal money was given to residents and businesses while the COVID-19 related economic slowdowns cost the country approximately $81.3 billion.

Government spending on this level hasn’t been seen since the Second World War.

The snapshot also detailed an increase to the net federal debt to $1.2 trillion.

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Historically low interest rates mean the hundreds of billions in borrowing comes with “manageable” costs, according to the government.

Adding to the deficit is a $37.3 billion boost to the federal wage subsidy program, signalling an expansion and incoming changes to the benefit. It covers up to 75 per cent of wages to a maximum of $847 a week for eligible companies.

The federal Liberals believe there will be a slow return to a new normal, with unemployment high and economic growth low through to at least the end of 2021.

Roughly two millions people are expected to remain out of work.

Women, youth, low-wage workers, racialized Canadians, Indigenous people and new immigrants all saw higher rates of job loss or reduced working hours and are also seeing slow, and in some cases, no benefits as the economy begins to reopen.

Even though Morneau said the government believes the worst of the economic harm from the pandemic is behind the country, a recovery can’t begin in earnest until an effective vaccine or treatment becomes widely available.

If prolonged shutdowns stay in place, or restrictions are not fully rolled back, a return to normal activity for households and businesses will be uneven and slower than hoped for.

The document doesn’t contain the five-year forecast traditionally part of federal budgets owing to the uncertain path the pandemic will take and the state of the economy beyond that.

–with files from The Canadian Press

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