Canada's 2023 Federal Budget: Fiscal Outlook Largely Intact
The Government of Canada tabled its FY22-23 budget on March 28. The federal government continues to move forward with increased spending in priority areas and provide targeted inflation relief. We view the outlook for public finances as largely unchanged. Although the budget is no longer expected to balance within the forecast horizon, deficits will trend gradually lower, and debt-to-GDP will resume a downward trend after experiencing a modest increase in FY23-24.“While the economy continues to adjust to higher interest rates and still elevated inflation, growth is clearly slowing. Furthermore, recent developments, including concerns about vulnerabilities in the global banking system, suggest that risks are tilted to the downside,” said Travis Shaw, Senior Vice President, Global Sovereign Ratings. “Nevertheless, we believe Canada has considerable capacity to absorb shocks and cope with pending challenges.”
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