FAO Expects Large and Growing Budget Deficits Under Current Fiscal Policies

TORONTO, December 11, 2017 – Today, the Financial Accountability Office of Ontario released the Fall 2017 Economic and Fiscal Outlook, which provides the FAO’s latest economic forecast and an updated assessment of the Province’s fiscal outlook.

The Honourable J. David Wake, Ontario’s Temporary Financial Accountability Officer, says that “the FAO is projecting a significant budget deficit for 2017-18, and a steady deterioration in the budget deficit over the next four years.”

In 2017-18, the FAO projects a deficit of $4.0 billion, the result of the Auditor General’s recommended accounting framework. Beginning 2018-19, the FAO projects a steady increase in the deficit due to more moderate growth in revenues and the growing fiscal impact of the Fair Hydro Plan. By 2021-22, the FAO projects a budget deficit of $9.8 billion. The introduction of the government’s Fair Hydro Plan has resulted in a significant deterioration of the Province’s budget balance over the outlook.

“The government’s decision to not adopt the Auditor General’s accounting recommendations, has contributed to a significant and growing gap between the fiscal outcomes projected by the FAO and the Province,” says Wake. Under the government’s accounting presentation, the FAO expects a small budget surplus in 2017-18, but a return to rising budget deficits by 2018-19.

The FAO projects that Ontario’s net debt will increase by more than $75 billion over the next four years to approximately $400 billion, on the Auditor General’s accounting basis. Rising debt will increase the Province’s net debt-to-GDP ratio to over 41 per cent by 2021-22, well above the government’s interim target of 35 per cent by 2023-24.

The FAO’s report concludes that additional measures to raise revenue or lower spending will be needed if the government intends to balance the budget and reduce the debt burden.

Click here for Fall 2017 EFO.

About the FAO

Established by the Financial Accountability Officer Act, 2013, the Financial Accountability Office (FAO) provides independent analysis on the state of the Province’s finances, trends in the provincial economy and related matters important to the Legislative Assembly of Ontario. Visit our website at http://www.fao-on.org/en/ and follow us on Twitter at https://twitter.com/InfoFAO.


For further information or to arrange interviews, please contact:
Kismet Baun l (416) 254-9232 l kbaun@fao-on.org l fao-on.org