Ontario, Canada’s most populous province, may not meet its deficit-reduction target in the 2014-2015 fiscal year because revenue is trailing forecasts, Finance Minister Charles Sousa said.
The province will probably fail to shrink the shortfall to C$10.1 billion ($9.2 billion) in the fiscal year that started April 1, from an estimated C$11.3 billion last year, Sousa told reporters today in Toronto. Revenue will be C$117 billion this fiscal year, down from the forecast C$120.5 billion in the last budget delivered May 2, 2013, Sousa said.
Ontario may benefit less from faster economic growth in the U.S. this year after the Canadian dollar appreciating over the last decade shrank the province’s manufacturing sector. Goods from Ontario made up 5.5 percent of U.S. imports last year, from 8.7 percent in 2003, according to a report produced by the province’s finance ministry and handed out at a separate Sousa event yesterday.
“Based on the projections we did last year, I would say we’ll probably be off,” said Sousa. “The economic recovery and gross domestic product growth that was anticipated is lower than everyone anticipated.”
Sousa hasn’t yet said when he’ll deliver the full 2014-15 budget beyond saying it will come in “the spring,” and will include a plan to balance the books by 2017-18 while increasing spending on some initiatives.
Ontario’s previous budget projected a 2013-14 deficit of C$11.7 billion.
Sousa said his government made a “determined decision” to preserve the well-being of Ontarians by “investing in those things that make us more competitive.”
“We’re going to continue to invest in infrastructure,” the finance minister said. “We’re going to continue to invest in skills and training.”
Manufacturing’s share of the province’s economy declined to 23 percent last year from 31 percent a decade earlier, in part due to a strong currency that is forecast to stay near the high end of its historical range against the U.S. dollar in the long term, data from the finance ministry report showed.
U.S. growth will accelerate to 2.7 percent this year from 1.9 percent last year, according to the median forecast of a Bloomberg survey of economists.