May 2012
Deficit for 2011-12 to be $2-4 Billion Lower than Forecast in Budget 2012
The March 2012 Fiscal Monitor reports an increase in the year-over-year deficit of $2.8 billion, from $6.2 billion in March 2011 to $9.0 billion in March 2012. However, more than all of this increase was attributable to the recording of liabilities of $2.2 billion in federal assistance to Quebec for sales tax harmonization and $0.9 billion for the estimated workforce adjustment costs associated with the 2012 Budget employee reductions.
Read MoreWhy is the Government Cutting $5.2 Billion?
Budget 2012 committed the government to cutting spending by $5.2 billion annually. This followed months of uncertainty as to how big the cut would be- as low as $4 billion, as high as $8 billion. It was a nice compromise.
This commitment followed a decision in the 2010 budget to cut defense spending, capping the International Assistance Envelope at $5 billion and freezing the operating budgets of all government departments for two years.
In both budgets, the government stated that the savings would be found primarily through greater "efficiencies".
Read MorePBO: Deficit Elimination, Joss Loss, Transparency and Fiscal Sustainability
On April 24th, the Parliamentary Budget Office (PBO) released its latest Economic and Fiscal Forecast. As usual, it generated some controversy, dismissed by the Government over the impact of the job losses resulting from the proposed spending reductions, but embraced by the Opposition, for acknowledging the job losses. The PBO is forecasting that the government is on track to eliminate the deficit by 2015-16.This note examines the PBO’s deficit forecast, how it has changed since November 2011Update and some of the issues underlying it.
