One of the stores in the city of Toronto that is forced to close due to the impact of the pandemic.NurPhoto
Justin Trudeau has indicated at different times that his Government does everything necessary to support Canadians and their economy during the pandemic.
Canada has been one of the countries that has drawn the most the checkbook to contain the ravages of covid-19.
Although this river of money has produced a level of imbalance in their accounts that has not been seen since World War II.
In 2019, the public deficit was 34.4 billion Canadian dollars (22.3 billion euros).
The Government estimated about 28.1 billion in 2020, but the coronavirus seriously altered the roadmap.
On September 29, the Office of the Parliamentary Director of the Budget (ODPP) announced that this year the hole will hit $ 328.5 billion.
According to the International Monetary Fund (IMF), Canada's deficit is the one that has skyrocketed the most in 2020 among developed economies: 19.9% of GDP.
The colossal increase in the deficit is explained by different programs.
For example, emergency benefits for the self-employed and students, commercial rental support, loans to the agri-food sector and salary subsidies.
Added to this are, among other initiatives, the refurbishment of schools, investments in research and the purchase of protective materials and detection tests.
“Ontario and Alberta, where the Conservatives rule, give us an idea of what a conservative federal government would have done.
In these provinces, it was decided, for example, to postpone the payment of taxes and reduce bills for certain services.
Trudeau turned to direct help.
Many would not have survived the crisis economically without this large injection of money, but with two consequences: the deficit and the lack of stricter controls to distribute aid.
These are points criticized by the conservatives, although the liberals argue that it was necessary to act quickly, "says Geneviève Tellier, professor of public finance at the University of Ottawa.
Parliament approved a conservative proposal (seconded by the Quebecois Bloc and the New Democratic Party) to examine the government's strategy and measures for covid-19.
The IMF notes in its October forecast that Canadian GDP will fall by 7.1% this year, instead of the 8.4% announced in June.
“We are already seeing some benefits.
The recovery in the labor market in almost all measures has been much stronger than in the US, where fiscal uncertainty and inaction have led to a headwind in recent months, "Warren Lovely wrote in a note to clients, Taylor Schleich and J. Paquet, economists at the National Bank of Canada.
On September 23, the Speech from the Throne took place, an act that restarts the parliamentary work and where the points of Trudeau's plan for the second phase of the pandemic were heard.
Elements such as the extension of subsidies for employment and commercial rental, as well as aid to specific sectors (such as tourism and culture) stood out.
However, the intention was also announced to create a Canadian network of public daycare centers (similar to the one in Quebec), drug insurance and a fund for low-polluting companies.
When the ODPP indicated that the deficit would reach 328.5 billion dollars, it also specified that in this figure it did not consider the projects listed in the Speech from the Throne.
"The new measures will likely add another $ 30 billion, while next year's deficit could be around $ 200 billion," said Doug Porter, an economist at BMO Capital Markets, in a report.
The ODPP believes that growth could reach pre-pandemic levels in early 2022, but with a loss in productivity due to the combined effect of COVID-19 and the drop in oil prices.
Trudeau has said that low interest rates allow the government to continue helping citizens and businesses.
The ODPP indicated that the public debt was 721,000 million dollars in 2019;
this year it will reach 1.05 trillion and will be around 1.30 trillion in 2025. Chrystia Freeland, Minister of Finance, declared: “The risk of withdrawing our support too soon is greater than the risk of spending too much”, immediately launching a message Against the image of a bottomless barrel: "But our budgetary outlook for covid-19 will be limited and temporary."
Luc Godbout, a professor at the School of Management at the University of Sherbrooke, comments: “Before the pandemic, Canada had a weaker debt ratio [25.9% of its GDP in 2019] than the average among members of the OECD or G20.
This enviable situation and the low rates allowed the country to finance the covid-19 programs.
Debt reached 46.9% of GDP in 2020, just over half the average among developed economies ”.
Godbout points out that a considerable part of the deficit consisted of non-recurring aid (such as emergency benefits for the self-employed).
“It would be a good idea to trace a path back to balance to send a message about the degree of control and to ensure, in the event of a new hard hit, that there is room for maneuver to act appropriately.
However, it should not come at the cost of quick or immediate spending restrictions, ”he adds.
For Pedro Antunes, chief economist of the Conference Board of Canada, Trudeau's plan presented in September seeks far-reaching changes in social security, the environment and training, “at a time when public spending is already at little-seen levels to avoid the effects of a massive economic crisis induced by COVID-19 ”.
According to Antunes, "this can only be financed, in the long term, by expanding the government's income base."
The Speech from the Throne only made brief reference to the great fortunes.
For example, limiting deductions for stock purchases and reducing tax evasion from digital giants.
The Broadbent Institute proposes going further, suggesting eliminating tax breaks for capital gains and dividends, as well as a (post-pandemic) increase in excise taxes.
“The big tax reforms in Canada came during periods of major crisis.
Let's think about the two world wars.
The pandemic can be a good occasion to weigh it up, ”says Geneviève Tellier.
"It is up to Minister Freeland to reassure rating agencies and investors through a long-term recovery plan," according to economists at the National Bank of Canada.
Freeland held a meeting with parliamentarians on November 5 regarding the extension of employment and commercial rent subsidies, as Trudeau presented an initiative a few days ago on these points.
However, the minister did not advance figures on the increase in the deficit or debt due to these aid.
He said those projections would come in a fiscal update later this fall, but did not set a specific date.
Nor did he refer to the other projects of the liberals mentioned in the Speech from the Throne.
The minister is expected to provide more answers to the accumulation of doubts when she presents this update.
So far, only the Fitch agency has reduced Ottawa's credit rating.
A survey by the firm Maru / Blue, published on October 13, found that 67% of Canadians consulted want the Government to pay attention to the excessive growth of the deficit.
However, in another question, 57% agree that it is not yet time to control spending.