Ontario can balance the books as early as next year, the province’s fiscal watchdog predicts.
The Financial Accountability Office (FAO), an independent official in the legislature, predicted that the red ink would stop flowing in 2023-24 and that the province would have a profit of $ 7.1 billion by 2026-27.
While Finance Minister Peter Bethlenfalvy is preparing for a budget later this month that will promise big spending when voters go to the polls on June 2, the FAO predicted that the shortfall for 2021-22 would be only $ 8.7 billion.
That is far lower than the $ 13.1 billion deficit that Bethlenfalvy had outlined when it presented the province’s 2021-22 fiscal update for the third quarter in February.
In the March 2021 budget, the treasurer had foreseen a deficit in 2023-24 of between $ 14.1 billion and $ 25.4 billion and did not outline a path to balance.
“The COVID-19 pandemic resulted in a major worsening of Ontario’s deficit, which nearly doubled to $ 16.4 billion by 2020-21,” the FAO noted.
“This was primarily due to the large but temporary costs of COVID-19-related measures, partially offset by significant increases in federal transfer payments to the province,” the office said.
“The FAO estimates that under current policies, Ontario’s budgetary position will improve from a $ 16.4 billion deficit in 2020-21 to a $ 7.1 billion surplus in 2026-2027,” it said.
“Above the outlook, strong revenue growth is expected to exceed the rate of increase in program spending, leading to a significant improvement in Ontario’s budget balance.”
The watchdog said that “healthy revenue gains are expected to continue as economic growth is expected to be robust in the short term, with a nominal GDP growth of 11.9 percent in 2021, the strongest growth since 1984, followed by a gain of 7.2 percent in 2022. “
Bethlenfalvy, which will present its budget before the election in the last week of April, is expected to address FAO results later Tuesday.
JOIN THE CONVERSATIONS