Ontario’s deficit is expected to quadruple to $41 billion in 2020-21 due to coronavirus costs, according to a report by the Financial Accountability Office (FAO).
The budget watchdog released its Spring 2020 Economic and Budget Outlook report on Monday.
“The report shows that the partial shutdown of the Ontario economy due to the COVID-19 pandemic will deliver a severe blow to the province’s revenues, increase spending, and result in substantially higher deficits and debt,” the FAO said in a release.
The deficit will be the largest in the province’s history.
The report also said the province’s net debt-to-GDP ratio will jump to a record 49.7 per cent — up almost 10 percentage points from last year.
“Even as the economy recovers through 2021, Ontario’s debt burden would remain elevated at 48.7 per cent of GDP next year,” the FAO said.
The budget watchdog said the province’s economic recovery will depend on the “success of the pandemic containment measures and the pace at which the economy can be safely reopened.”
“Assuming the pandemic shutdown is gradually eased through the summer, the FAO projects that Ontario’s economy will steadily strengthen into 2021, helping to reduce the budget deficit to $25.3 billion in 2021-22.”
However, it warns of that if the economic recovery takes longer than expected, the debt could further skyrocket.
“There is significant risk that reopening the economy could take longer than expected due to continued public health concerns. If Ontario’s economic recovery is delayed, budget deficits and provincial debt would be much higher, pushing Ontario’s net debt-to-GDP ratio above 52 per cent next year.”
Read the full report below: