TORONTO — Ontario, Canada’s most populous province, projected its budget deficit would widen to $38.5 billion in 2020-2021 compared to $20.5 billion seen in March, as it raised support for the economy ravaged by the coronavirus crisis.
The province, Canada’s industrial heartland, raised projected COVID-19 support measures to $30 billion from $17 billion in March.
It includes $4 billion in partnership with the federal government to help municipalities and transit agencies, as well as a one-time top up of $4.3 billion for a health contingency fund and $3 billion in direct support for people and jobs.
Program expenses are projected to be $174.2 billion in 2020-2021, which is $13.1 billion higher than estimated in March, while revenues are seen $5.7 billion lower at $150.6 billion as the economy contracts.
The province projects GDP will shrink by 6.7 per cent in 2020 before rebounding by 5.5 per cent in 2021. Much of its economy has reopened in recent months as the number of coronavirus cases declined.
Net debt-to-GDP ratio is expected to rise to 47.1 per cent in 2020-2021 from 41.7 per cent seen in March.
Ontario is one of the world’s biggest sub-sovereign borrowers. It has completed $23.6 billion of long-term borrowing so far in 2020-2021. Total long-term borrowing for the fiscal year is seen at $52.1 billion.
The province is maintaining a higher than normal reserve of $2.5 billion to give it greater fiscal flexibility.
© Thomson Reuters 2020