04:21 PM EDT, 04/16/2024 (MT Newswires) -- According to Jimmy Jean over at Desjardins, the Government of Canada managed to "stay the course on deficits" although significant lending initiatives push issuance higher. In the 2023-24 fiscal year, Jean noted, the government reports a $40.0 billion deficit, confirming Finance Minister Freeland's earlier guidance. The deficit is projected to show only a modest reduction in 2024-25 ($39.8B), despite the government expecting $6.5B more revenues that year, coming from an announced increase in the capital gains inclusion rate (under certain conditions) for high-income individuals and for corporations. A total of $19B is expected to be collected via this measure over the planning horizon. Jean said: "This is perhaps the most prominent item of the budget that had not been pre-announced, even if it was highly speculated."

Jean also noted the government projects a declining path for deficits, getting to 0.9% in 2026-27 (in line with the fiscal anchor threshold). He added: "We see meaningful risks that fiscal anchors end up being breached. We will be sending out our full analysis of the budget shortly, but at a high level, we believe that lots of the bottom-line improvement being promised hinges on assumptions we consider to be optimistic on nominal GDP and new tax receipts. Similarly, the recently promised spending on housing-related infrastructure is only partly booked."