The report projects that the federal government’s deficit will rise tenfold to CAD343.2bn (USD255.1bn) in 2020-21. This vast increase raises the question of what exit strategies the government will employ, and whether Canada is facing a round of austerity.
Cuts to the federal bureaucracy are likely, especially for back-office functions.
Provinces, already struggling financially, face reduced financial support from Ottawa, raising their default risks.
Privatisation is likely if austerity measures are needed, especially under a Conservative government.
Canada could face credit rating cuts if the government cannot manage the economy effectively.
The Trudeau government’s charity-related payment controversy could lose it support if an election were held soon.
