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Economists call for improved spending transparency as Trudeau again refuses to set fiscal anchor

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The monthly fiscal monitor provided by Finance Canada outlines spending, but also doesn’t break down transactions into finer details, Page said.

His comments come after the Trudeau government had faced criticism even before the pandemic about its rising fiscal spending measures, which went toward a host of programs aimed at green infrastructure, social housing and other items. Even so, Ottawa largely kept its debt-to-GDP ratio stable as economic growth before the pandemic provided more opportunity to spend.

Rebekah Young, director of provincial and fiscal economics at Scotiabank, has recommended Ottawa set an updated fiscal anchor of 65 per cent of GDP, as well as provide itself with space to move should the economy sour amid successive viral waves.

“I would argue that because of the uncertainty, in fact, they could actually instill more confidence by providing an anchor for coming years,” she said.

“It’s another way to send a signal.”

Former Parliamentary Budget Officer Kevin Page: “Where is the policy strategy that guides us through the pandemic, and to the post COVID-19 recovery?” Photo by Althia Raj/Postmedia/File

While Canada’s federal and provincial debt levels continue to soar, however, most economists are largely in agreement that Ottawa maintains plenty of fiscal capacity to continue spending. Low interest rates have kept debt charges well below levels seen in the early 1990s.

The federal deficit in 2021 is expected to surge above $350 billion, according to the government’s last budget update.

The International Monetary Fund in its recent bi-annual economic outlook estimates that Canada’s budgetary shortfall in 2020 will reach 19.9 per cent of GDP, the highest among all Western democracies (the United States will run the second-largest shortfall with 18.7 per cent). By 2021 that shortfall is expected to fall to 8.7 per cent, but still among the largest in developed economies.