Prime Minister Justin Trudeau’s efforts to prevent the Canadian economy from collapsing have resulted in more red ink in just two months than in any full year in the country’s history.
The shortfall for April and May hit $87 billion (US$65 billion), according to finance department figures released Friday, as revenue slumped and new program spending kicked in. The previous record deficit over a 12-month period was $56 billion, run by former Prime Minister Stephen Harper in 2009.
While the spending has broad political support, it’s a dramatic departure for a country with a longstanding aversion to debt and leaves Canada years away from ever balancing its books. The government hasn’t provided budget projections beyond the current year.
The data show revenue sank to $32.4 billion in the two-month period, down 43 per cent from a year ago. That’s primarily due to a sharp decline in receipts from the federal sales tax as Canadians curbed spending. Program expenses more than doubled to $115.6 billion over the period, reflecting the massive costs of supporting individuals and companies through the deepest downturn since the Great Depression.
The latest shortfall already represents about 25 per cent of the $343 billion deficit the government forecast for the current fiscal year, which began April 1.