More government spending planned as Canada records massive deficit amid COVID-19 pandemic

Source: Xinhua| 2020-12-01 16:21:24|Editor: huaxia
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by Christopher Guly

OTTAWA, Nov. 30 (Xinhua) -- The Canadian government's spending spree on programs and services amid the COVID-19 pandemic has led to a massive deficit at risk of growing larger if the "once-in-a-century kind of crisis" worsens, warned a national fall economic statement released on Monday.

At 294 billion U.S. dollars, this year's federal deficit is already 30 billion dollars higher than what the government forecasted in July, and it could reach 307 billion dollars should the second wave of the pandemic result in escalated lockdown restrictions on businesses.

"This is the most severe challenge our country has faced since the Second World War," said Canadian Finance Minister Chrystia Freeland when unveiling the "Supporting Canadians and Fighting COVID-19" economic update in the House of Commons.

"It is our most severe economic shock since the Great Depression, and our most severe public health crisis since the Spanish flu a century ago," Freeland said.

Canada's deficit situation is also "eight times bigger than the previous all-time national average," according to Pierre Poilievre, the Official Opposition Conservative shadow finance minister.

"We have gone from a debt-to-GDP ratio of 30 percent to 56 percent," he said in the Commons on Monday, adding that Canada now has "the biggest deficit by far in all of the G20."

Freeland said that "when the virus is under control and our economy is ready for new growth," the government plans to spend about 3 to 4 percent of Canada's GDP over three years.

The health and economic crisis has resulted in the Canadian government spending eight out of every 10 dollars "to fight the virus and support Canadians," said Freeland, who costed that expenditure at 25 billion dollars.

New spending announced on Monday will add to that tally.

On climate-friendly initiatives, the government plans to plant 2 billion trees across Canada over the next decade at a cost of up to 2.4 billion dollars, and allocate another 2 billion dollars toward making homes more energy-efficient.

Billions of dollars will also be set aside to increase the national child benefit, help young people find jobs, ease student debt and provide safe drinking water in indigenous communities. Enditem