An update of the Budget 2015 fiscal outlook

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An update of the Budget 2015 fiscal outlook

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Using the Bank of Canada’s July projection of real GDP growth, PBO estimates that an updated Budget 2015 outlook would show deficits of $1.5 billion in 2015‐16 and $0.1 billion in 2016‐17, and a surplus of $1.5 billion in 2017‐18.  

However, the impact of weaker real GDP growth in 2015 would be partially offset by higher realised GDP inflation than assumed in Budget 2015 and by lower projected interest rates following the Bank of Canada’s July 15th lowering of its target for the overnight rate. Accounting for revisions to real GDP growth, GDP inflation, and interest rates would result in a deficit of $1.0 billion in 2015‐16, and surpluses of $0.6 billion in 2016‐17 and $2.2 billion in 2017‐18. Including a new set‐aside for contingencies would reduce the budgetary balance further.1   

Table 1:  Updated Budget 2015 budgetary balance outlook ($ billions)

2015-16 2016-17 2017-18
Budget 2015 outlook 1.4 1.7 2.6
Updated outlook (revised real GDP) -1.5 -0.1 1.5
Updated outlook (all revisions) -1.0 0.6 2.2

Sources:  Finance Canada; PBO calculations.

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