Canada’s Deficit Soars As Finance Minister Resigns

Prime Minister Justin Trudeau’s government reported a significantly larger deficit than anticipated, breaking a fiscal promise made by Finance Minister Chrystia Freeland, who resigned on the same day she was set to present updated financial forecasts, Erika Hertzberg and Randy Thanthong-Knight reported for Bloomberg News.

Hours before her resignation, Freeland accused Trudeau of prioritizing “costly political gimmicks” and failing to maintain the “fiscal powder dry” in preparation for Donald Trump’s presidency. I Photo: Chrystia Freeland X

The government posted a C$62 billion ($43.5 billion) deficit for the last fiscal year, exceeding Freeland’s commitment to keep the shortfall at or below C$40.1 billion.

Hours before her resignation, Freeland accused Trudeau of prioritizing “costly political gimmicks” and failing to maintain the “fiscal powder dry” in preparation for Donald Trump’s presidency.

In a subsequent statement, released shortly before Dominic LeBlanc was sworn in as Freeland’s replacement, the government attributed the larger deficit to C$21.1 billion in higher-than-expected Indigenous liabilities and allowances for pandemic-related financial supports, such as business loans.

The new fiscal projections estimate a C$48.3 billion deficit for 2024-25, about 1.6% of GDP, with a projected shortfall of C$42.2 billion in 2025-26.