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Economic Viewpoint

Don’t Judge the Provinces’ Books by Their Covers - Five Themes from the 2024 Provincial Budget Season, and Why Things Aren’t as Bad as They Seem

April 3, 2024
Marc Desormeaux
Principal Economist

Many taxpayers and investors are feeling less optimistic about the future now that budget season 2024 has come to a close, as budget balances deteriorated nearly across the board.

However, no province is expecting to run a record shortfall as a share of GDP in the coming fiscal year. Moreover, while the provinces’ combined net debt-to-GDP ratio is set to rise in the year ahead, projections for this metric are lower than they were for most of the decade before the pandemic.

Spending increases drove the bulk of deficit deterioration, but that doesn’t mean governments are being irresponsible. If we only look at headline spending numbers, we’ll miss important fiscal planning nuances. We also need to consider population growth and aging.

We continued to see meaningful changes to the tax base in budget season 2024, and these remain a risk going forward. That said, contingency funds are still sizeable and offer upside potential for the bottom line.

Alberta and New Brunswick projected particularly impressive fiscal metrics, while markets gave Ontario’s plan a warmer welcome than we might have expected following increases to its deficit forecasts.

The short-run economic outlook, the effects of potentially higher-for-longer interest rates, and the consequences of population aging remain question marks going forward.

NOTE TO READERS: The letters k, M and B are used in texts, graphs and tables to refer to thousands, millions and billions respectively. IMPORTANT: This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area of investment services. Data on prices and margins is provided for information purposes and may be modified at any time based on such factors as market conditions. The past performances and projections expressed herein are no guarantee of future performance. Unless otherwise indicated, the opinions and forecasts contained herein are those of the document’s authors and do not represent the opinions of any other person or the official position of Desjardins Group.