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The FAO says the COVID-19 pandemic delivered “a significant negative shock” to the province’s economy, and a second wave has the potential to do more damage.
The FAO 2020 Fall Economic and Budget Outlook estimates the government will spend $37.2 billion more on operations than it takes in for the fiscal year 2020-21.
The legislative watchdogs allow the deficit could be smaller if the Ford government doesn’t push all of its $9.3 billion in unused contingency funds out the door.
Next year’s deficit is forecast at $20.4 billion, barring more lockdowns.
The FAO projects that real GDP in Ontario will decline by a record 6.8% this year, followed by 5.1% growth in 2021.
The unemployment rate is expected to smash a 26-year record of 9.7%, not seen since the recession of the early to mid-1990s.
The FAO report make it clear that the province’s books, as well as the household budgets of its residents, would be in far poorer shape without the pandemic financial supports provided by the Justin Trudeau government.
Although the Ford Progressive Conservatives had promised to eliminate the province’s deficit, they had not been planning to do so during their first term of office, which is scheduled to end in an election in 2022.