The Canadian government will run a $29.4 billion deficit this year and plans to continue to run deficits for the next five years in order to finance $50.4 billion in new spending.
Those funds will be directed towards infrastructure, social programs and tax measures designed to boost the middle class and tackle rising income inequality. Deficits are projected to be $29 billion in 2017; $22.8 billion in 2018; $17.7 billion in 2019 and $14.3 billion in 2020.
The Liberals had promised to run $10 billion deficits for three years in order to pay for investments in infrastructure and other spending increases, but in February, Finance Minister Bill Morneau released a new deficit forecast of $18 billion. Government revenues have been hit by falling oil prices and a sluggish economy.
According to budget documents, in 2016 $18 billion of the deficit is due to government revenue shortfalls while new spending will contribute $11 billion to government debt.
An economic analysis within in the budget includes a silver lining however: Canada’s non-energy economy “shows signs of resilience” and non-oil producing regions have been adding jobs — but not at a fast enough rate to prevent Canada’s unemployment rate from rising to 7.3%.