06:19 AM EDT, 10/07/2025 (MT Newswires) -- Canada's federal government will "modernize" its fiscal approach in the upcoming Nov. 4 budget, Bank of Montreal (BMO) said Monday.

The two key changes are:

-- Introduction of a capital budgeting framework that separates the operating and capital budgets. The government is expected to show spending restraint and a path back to balance in the operating budget while layering new spending onto the capital side. These estimates will supplement, not replace, the traditional budget presentation and figures reported in the public accounts.

-- A reset of the budget cycle so that the annual budget is tabled in the fall, ahead of the fiscal year. The fiscal update, formerly known as the Fall Economic Statement, will shift to the spring.

The bank recalled that the Parliamentary Budget Officer (PBO) recently estimated a $68.5 billion budget deficit, or 2.2% of gross domestic product, for FY25/26.

That included measures announced through early September, including the increase in defense spending to 2% of GDP, but didn't build in any platform promises yet to roll out, which were many, added BMO.