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OTTAWA \u2014 The parliamentary budget officer said he can\u2019t properly assess whether the federal government is on track to meet its fiscal targets because the Liberals\u2019 new budget benchmarks haven\u2019t been defined.<\/p>\n
Without a spring budget, that means Ottawa\u2019s budgetary watchdog is in the dark on how recently announced plans to boost Canada\u2019s defence spending and cut income taxes will affect the government\u2019s fiscal position.<\/p>\n
Prime Minister Mark Carney announced a plan before the spring election to split Ottawa\u2019s budget into operating and capital streams, and to balance the operating side in three years.<\/p>\n
Parliamentary budget officer Yves Giroux said in an updated economic and fiscal monitor report that the Liberals haven\u2019t yet defined what will be included in this operating budget.<\/p>\n
\u201cWithout a clear definition of what counts as operating spending, it\u2019s impossible to evaluate whether the government is on track to meet its new fiscal anchor,\u201d Giroux said in a media statement.<\/p>\n
Carney announced plans earlier this month to reach the NATO defence spending target of two per cent of GDP this fiscal year with $9.3 billion in new funding \u2014 a rapid expansion of his own previous promise to hit those levels by the end of the decade.<\/p>\n
The prime minister promised $4.3 billion in aid for Ukraine at the G7 summit earlier this week.<\/p>\n
The federal government also has introduced plans for a one-percentage-point cut to the bottom income tax bracket, which the PBO pegged at a net cost of $28 billion over five years in a separate report released recently.<\/p>\n
The government\u2019s old fiscal anchors were based on keeping annual budget deficits below one per cent of GDP and keeping debt-to-GDP on a declining path over the medium term.<\/p>\n
The PBO\u2019s latest report notes that the federal government could hit its operating budget targets but still see the debt-to-GDP ratio rise due to additional borrowing to fund, for example, accelerated military spending.<\/p>\n
\u201cThis means that the government could achieve its fiscal objective and yet be fiscally unsustainable,\u201d the report says.<\/p>\n
Parliamentarians \u201cmay wish to seek additional clarity\u201d on how the government intends to define these measures and keep federal finances stable, the report concludes.<\/p>\n
The PBO does say the federal government\u2019s deficit for the last fiscal year likely came in at $46 billion, roughly $4.3 billion lower than estimates in March, thanks in part to higher corporate tax revenues and the imposition of counter-tariffs on the United States.<\/p>\n
The office\u2019s updated economic and fiscal projections predict economic growth will stall in the second quarter as Canada\u2019s trade war with the United States sinks exports.<\/p>\n
\u00a92025 The Canadian Press<\/strong><\/p>\n<\/p><\/div>\n