Media Release: FAO expects strong revenue growth will significantly lower the budget deficit

[La version française suit le texte anglais.]


TORONTO, February 8, 2022 - Today, the Financial Accountability Office of Ontario (FAO) released an updated projection of the government’s fiscal position over the 2021-22 to 2023-24 period. The report compares the FAO’s outlook to the government’s plan presented in the Fall Economic Statement (FES) for the budget balance, revenues, program spending and key debt measures.

Based on stronger revenue growth, the FAO expects smaller budget deficits compared to the government’s projection. The FAO expects the deficit to decline from $16.0 billion in 2021-22 to $2.8 billion in 2023-24. By comparison, the government expects a budget deficit of $11.4 billion in 2023-24. Smaller budget deficits and robust economic growth will improve the Province’s key fiscal sustainability indicators, including the net debt-to-GDP ratio and debt interest payments as a share of revenue.

The FAO projects revenues to be $7.6 billion higher than the government’s plan by 2023-24, reflecting stronger expected economic growth and potential unannounced tax cuts in the Fall Economic Statement which are not included in the FAO’s projection.

Although the FAO’s total program spending projection in 2023-24 is similar to the Province’s, the government’s plan contains a $6.3 billion combined funding shortfall across most sectors, of which $4.5 billion is in the health sector. At the same time, the government’s plan includes significant unallocated funds which could be used to support the sectors with funding shortfalls, create new programs, enhance existing programs, and/or lower the budget deficit.

Find our full report on our website, here.

Quick facts:

  • By 2023-24, the FAO projects Ontario’s net debt-to-GDP ratio will reach 39.0 per cent, modestly below pre-pandemic rates.
  • Interest on debt as a share of revenue is projected to decline to 6.9 per cent in 2023-24, below its pre-pandemic level of 8.0 per cent in 2019-20.
  • The FAO’s projections are based on current government revenue and program spending policies, the estimated impact of the Omicron wave of the COVID-19 pandemic, and new program announcements made up to January 20, 2022. If the government announces new tax cuts or spending initiatives in the future, the FAO’s deficit projections would deteriorate.

About the FAO

Under the Financial Accountability Officer Act, 2013, the Officer 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 and follow us on Twitter and LinkedIn.


For further information, please contact:
Jessica Martin l 647.527.2385 l l