07:02 AM EST, 11/05/2025 (MT Newswires) -- Canada's federal government presented its budget on Tuesday and, according to Bank of Montreal (BMO), the key messages are:

-- Budget deficit of $78.3 billion in FY25/26, $65.4 billion in FY26/27;

-- Debt-to-gross domestic prouct rises to 42.4%; medium-term holds above 43%;

-- Net new stimulus of $20 billion this fiscal year, mostly already announced;

-- Pro-growth policy tilt with tax relief, infrastructure spending and government efficiency;

-- Economic assumptions subdued for 2025 and 2026, given trade uncertainty.

This is a big budget that opens up very large federal deficits for Canada and leaves a "meaningful structural"

deficit down the road, noted the bank.

However, market expectations have already anticipated these shortfalls, and it could have been worse, pointed out BMO. Talk on the Street had been as high as into the $90 billion-to-$100 billion range for the budget deficit.

At the same time, the policy underlying these deficits is more palatable than those of the past decade, added the bank. That is, they are built less on social spending and bigger government, and more on pro-growth measures while squeezing out some government efficiency.

For a country "starving" for productivity growth, tax relief and a major infrastructure push are hard to dislike, although execution on the latter will matter a lot, according to BMO.