Parliament’s budget watchdog says that it’s likely the federal deficit for the year will hit $252.1 billion as a result of the COVID-19 pandemic.
The figure is an estimate based on the almost $146 billion in spending measures the government has announced to help cushion the economic blow from the pandemic, estimated declines in the country’s gross domestic product, and the price of oil remaining well below previous expectations.
Parliamentary budget officer Yves Giroux’s report assumes real GDP will contract by 12 per cent this year and help shoot the federal debt-to-GDP ratio to 48.4 per cent.
The report out this morning says the debt ratio could keep rising if some of the emergency aid measures are extended or made permanent.
Giroux says extra spending may be required if the situation persists for longer than expected or the economy is slow to recover when restrictions are lifted.
His report says the estimates are one possible scenario if current public health measures remain or are slowly, but not entirely, lifted over the rest of the calendar year.