TORONTO (Reuters) – Ontario, Canada’s most-populous province, said on Thursday it would spend more on healthcare and support for the economy during the coronavirus crisis, as it projected a record budget deficit for 2020-21 and additional shortfalls over future years.
Ontario, which is Canada’s industrial and manufacturing heartland, forecast a deficit of C$38.5 billion ($29.5 billion) in the current fiscal year, matching an August forecast, a budget document showed. The province’s Progressive Conservative Party government delayed the budget from March because of the pandemic. Its fiscal year began on April 1.
The government plans to spend C$45 billion over three years for COVID-19 support, after allocating C$30 billion for pandemic relief in August, the document showed.
New funding includes spending on health and on a fund to support people and jobs, as well as investment in broadband infrastructure.
The spending “provides relief for families, workers, businesses and communities, while laying the groundwork for our future economic recovery, Finance Minister Rod Phillips said in prepared remarks.
The deficit is projected to narrow to C$33.1 billion in 2021-22 and then to C$28.2 billion in 2022-23.
Ontario has recorded more than 3,000 deaths and has nearly 80,000 COVID-19 cases, making it Canada’s second-worst affected province behind Quebec. Much like rest of Canada, Ontario has seen a resurgence in coronavirus infections, which has led to the reintroduction of some restrictions that could slow the economy.
The province, which is one of the world’s largest sub-sovereign borrowers, projected GDP to shrink by 6.5% in 2020 before rebounding by 4.9% in 2021.
The net debt-to-GDP ratio is expected to rise to 47.0% in the current fiscal year from 39.7% in 2019-20 and to continue to rise in future years. It will set a long-term target for the ratio in the 2021 budget, which it expects to deliver by the end of March next year.
The yield on Ontario’s 10-year bond eased on Thursday by about half a basis point to 1.317%, which was about in line with moves on other provincial bonds.
(Reporting by Fergal Smith; Editing by Peter Cooney and Alistair Bell)