A recent report by the Financial Accountability Office of Ontario (FAO) warns of significant increases in the province’s deficit and debt over the next five years.
The report, released by Ontario’s financial watchdog, examines the economic outlook and finances of the province from 2024-25 to 2029-30. According to the FAO, based on the projected Ontario economy and current government policies, the budget deficit is expected to climb from $1.3 billion in 2024-25 to $12.0 billion in 2025-26.
The FAO predicts escalating budget deficits in Ontario, with no immediate return to balance as previously forecasted. The deficit is anticipated to reach $7.9 billion in 2028-29. Additionally, the province’s net debt is forecasted to rise from $408.0 billion in 2023-24 to approximately $549.3 billion in 2029-30, driven by accumulated deficits and increased non-financial assets, particularly infrastructure assets.
In response, a spokesperson from Finance Minister Peter Bethlenfalvy’s office emphasized that Ontario’s finances are currently in a stronger position than in previous years and reassured that comprehensive financial information will be provided with the tabling of the Public Accounts.
When Ontario’s budget was presented in May, officials indicated a growing deficit, expected to rise from $6 billion in 2024 to $14.6 billion in 2025, with a plan to achieve a balanced budget by 2027-28.
Despite challenges posed by trade policies, the FAO anticipates Ontario’s real GDP growth to slow initially due to U.S. tariffs impacting export demand and employment. However, as the economy adjusts, GDP growth is projected to return to the long-term average of 1.9% per year.
The FAO highlights the uncertainty surrounding the actual impact of tariffs on Ontario’s economy, outlining two scenarios. In a ‘low impact’ scenario, with more favorable U.S. tariff policies, the budget deficit could improve to $3.9 billion by 2029-30. Conversely, a ‘high impact’ scenario with harsher tariffs could lead to a deficit of $13.4 billion by the same year.