The Liberal government is now forecasting larger-than-expected deficits for the next two years even before adding billions in promised spending in its first budget, which will be tabled on March 22.
"The government is moving forward with a fundamentally new approach - a new plan to transform the economy for the benefit of every Canadian. Now is the time to make investments to build a stronger middle class and foster long-term growth," Finance Minister Bill Morneau said in prepared remarks for a town hall in Ottawa Monday morning.
CBCNews.ca is carrying the event live.
Morneau said the government will post a smaller than projected deficit of $2.3 billion for 2015-16, down from the $3-billion deficit projected in November's fall fiscal update.
But that deficit will balloon to $18.4 billion in 2016-17 and $15.5 billion in 2017-18 - and that is before any new spending Morneau outlines in the March budget. Those numbers are drastically different from the $3.9 billion and $2.4 billion forecast just three months ago.
The revised two-year economic and fiscal outlook takes into account sharp declines in crude oil prices since the fall update and continued uncertainty in the global economy.
The Liberals had promised to double infrastructure spending and provide new money Indigenous Peoples and other groups during last year's election campaign.
Prime Minister Justin Trudeau has already said his government will not be able to keep an election promise to keep deficits under $10 billion for the next budget year and has backed away form a promise to balance the budget by the end of his four-year mandate.
The Liberals now say they will keep Canada's debt-to-GDP on a downward trajectory, though Monday's numbers suggest they may only narrowly meet that promise in the next two years.
More to come
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