Prime Minister Justin Trudeau sits beside Deputy Prime Minister Chrystia Freeland before speaking to members of caucus on Parliament Hill in Ottawa, Thursday, January 23, 2020. Parliament’s spending watchdog says the federal response to the COVID-19 pandemic should send the deficit to $363.4 billion. THE CANADIAN PRESS/Adrian Wyld

Prime Minister Justin Trudeau sits beside Deputy Prime Minister Chrystia Freeland before speaking to members of caucus on Parliament Hill in Ottawa, Thursday, January 23, 2020. Parliament’s spending watchdog says the federal response to the COVID-19 pandemic should send the deficit to $363.4 billion. THE CANADIAN PRESS/Adrian Wyld

PBO sees $363 billion deficit, warns of pitfalls from Liberals’ promised stimulus

OTTAWA — Parliament’s spending watchdog says the federal response to the COVID-19 pandemic should send the deficit to $363.4 billion.

In a report this morning, budget officer Yves Giroux says the deficit should fall over time as emergency spending measures wind down over the next 12 months.

The economy too is faring better than Giroux anticipated, and his office has revised its projections for economic growth starting in the second half of this year.

With the economy doing better than expected, and the deficit falling over time, the budget office expects federal finances to become sustainable again.

The economy could also get a boost from the Liberals’ promised fiscal stimulus that is valued between $70 billion and $100 billion over three years to be outlined in this year’s federal budget.

Giroux’s outlook doesn’t account for that spending because of the lack of detail about how it will be used, but he does warn it would result in larger deficits that may spin out of control depending on how the spending is financed.

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