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Ontario budget

Ontario: Budget 2020. The Pandemic Is Dealing a Tough Blow to the Province’s Financial Situation

November 5, 2020
François Dupuis, Vice-President and Chief Economist • Mathieu D’Anjou, Deputy Chief Economist • Benoit P. Durocher, Senior Economist

Unsurprisingly, COVID‑19 and the cost of the many measures introduced to mitigate the pandemic’s repercussions for Ontarians are having an adverse impact on the Ontario government’s financial situation. The new budget tabled today calls for a $38.5B deficit for 2020–2021. At the time of last spring’s update, this very deficit had been estimated to be $20.5B. The large deficit is due to a slight drop in revenue (-3.2%) and, in particular, a surge in program spending (+14.6%). The budget deficit should gradually shrink as of 2021–2022, but projections from the Ministry of Finance indicate that it could remain high for several more years. Under these conditions, the Ontario government’s net debt will continue to ascend in the coming years; its debt to GDP ratio could hit a record 49.6% in 2022–2023.