Canada's federal deficit is projected to reach $46.5 billion for the 2025-26 fiscal year, according to the latest budget update from the Department of Finance. This marks an increase from the $40 billion deficit forecasted in the previous year, driven by higher spending on social programs and infrastructure.
Among provinces, Alberta is facing the largest deficit, with a projected shortfall of $6.9 billion for 2025-26, as reported by the Alberta Treasury Board. This is attributed to declining oil revenues and increased healthcare costs. Ontario's deficit is expected to be $9.8 billion, while Quebec projects a deficit of $11.0 billion.
Economists warn that rising deficits could lead to higher borrowing costs and potential credit rating downgrades if not addressed. The federal government has announced plans to reduce the deficit to $25 billion by 2028-29 through spending cuts and revenue increases, but details remain vague.
