While there’s much worse to come, the initial onset of Covid-19 pushed Canadian governments sharply into deficit for fiscal 2019, according to new data from Statistics Canada.
Federal, provincial, and local governments recorded a combined deficit of $25.3 billion for the year ended March 31, 2020, StatsCan reported, following a surplus of $2.6 billion the previous year.
That reading captures only the very early effects of the pandemic, but does include the effects of measures such as retroactive payments for the Canada Emergency Wage Subsidy, the report noted.
“The marked decline in economic activity in [fiscal 2020], coupled with broad fiscal measures implemented in response to the Covid-19 pandemic, will lead to record deficits, especially for the federal government,” StatsCan said.
The fiscal 2019 deficit, which amounted to 1.1% of GDP, was already the largest in seven years.
“The deficit is largely explained by the weakest tax revenue growth (+2.0%) since the recovery from the 2008 financial crisis, combined with 5.1% growth in expenses,” StatsCan said, noting that the growth in expenses was well above the average rate of 3.6% since the financial crisis.
SatsCan also reported that Canadian workers and employers paid $71.7 billion in contributions to the Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) in fiscal 2019, and that the plans paid out $64.1 billion in pensions and benefits.