Queen’s Park shaves $700 mil off its deficit in first-quarter fiscal update, says province has shown clear signs of economic recovery since mid-2020

The province has released a first-quarter update on its books and says Ontario will still be in the red by the end of its fiscal year, but by $700 million less than forecast.

Finance Minister Peter Bethlenfalvy handed down the update on Thursday, indicating the province’s deficit is projected to sit at $32.4 billion for the 2021-2022 fiscal year, compared to the $33.1 billion forecasted in the budget handed down in March. Ontario’s fiscal year began on April 1.

“While uncertainty related to the pandemic and the future pace of economic recovery remains, since the 2021 Budget private sector real gross domestic product forecasts for 2021 have been revised significantly upwards, reflecting significant progress on COVID-19 vaccinations and stronger than expected United States and global growth,” said Bethlenfalvy. “This improvement is the result of prudent fiscal management and higher than projected revenue due to a stronger 2021 growth forecast for the province.”

The fiscal update indicates that Ontario’s Gross Domestic Product (GDP), the monetary value of all the goods and services the province produces, grew by 1.2 per cent in the first quarter. The report also points to decreased unemployment across the province as an improving economy; from May 2020 to July 2021, Ontario cut over five per cent of its jobless rate to sit at 8.0 per cent flat.

Revenues for the province in 2021-2022 are projected to be $2.9 billion higher than was forecast in the 2021 budget released in March, due in part to higher tax revenues related to a stronger 2021 economic growth forecast. Expenses are projected to be $2.2 billion higher than forecast in March, due to funding allocations towards COVID-19-related projects. Interest on debt is projected to remain the same as forecasted in the budget, at $13.1 billion.

As of August 4, 2021, the Province of Ontario has borrowed $21.0 billion, completing 40 per cent of its long-term borrowing program for 2021-2022.

Feature image courtesy Sara Long via Flickr