201201 Freeland
Chrystia Freeland, Canada's deputy prime minister and minister of finance, delivers the 2020 fiscal update in the House of Commons on Parliament Hill in Ottawa, Ontario, Canada, on Monday, Nov. 30, 2020. Image Credit: Bloomberg

Ottawa: Canada’s budget deficit is projected to balloon to a record 382 billion Canadian dollars (Dh1 billion) as government spending skyrockets to combat the spread of the novel coronavirus, the finance minister announced Monday.

The amount for the 2020-2021 fiscal year, which began on April 1, is higher than an estimate of $343 billion announced in July and almost 20 times higher than the shortfall in the last budget released in March 2019, before the pandemic.

Finance Minister Chrystia Freeland also said the government was preparing to spend another $70 billion to $100 billion over three years to jolt the economy once the pandemic is over.

The aim, she said, is to build back the economy to be greener, more inclusive, more innovative and more competitive.

“When the virus is under control and our economy is ready for new growth, we will deploy an ambitious stimulus package to jump-start our recovery,” Freeland told the House of Commons.

“Spending roughly three to four per cent of GDP, over three years, our government will make carefully judged, targeted and meaningful investments to create jobs and boost growth,” she said.

The pandemic shut down large swathes of the Canadian economy in March, and several regions are now under lockdown again as a second wave of Covid-19 — worse than the first — sweeps across the country.

The government has spent hundreds of billions to support out-of-work Canadians and businesses that were forced to close temporarily.

Notably, Can$1 billion was spent on vaccine agreements to secure 429 million doses from seven pharmaceutical firms, and $322 billion went to Canadians directly, so far.

As a result, the government’s debt is set to rise to more than $1.2 trillion.

The debt as a per centage of GDP will increase from 31.2 per cent last year to 50.7 per cent this year, and 52.6 per cent next year, according to the finance department.

Freeland’s fall economic statement — essentially a mini-budget — also signaled the government’s intent to move ahead on charging a sales tax on video streaming subscriptions like Netflix, and to restrict stock option deductions, as well as support home energy retrofits and more electric car charging stations.