The Carney government announced billions of dollars in new spending at its spring economic update on Tuesday, saying that the nation's financial position is better than expected and the deficit was much lower than forecasted.
The update from Finance Minister François-Philippe Champagne said the "economy avoided a recession and domestic activity remained solid, even as tariff increases and trade tensions weighed on activity." It also noted that the Canadian economy is more insulated from the current disruptions in the Middle East, as a net energy exporter with limited exposure to trade through the Strait of Hormuz.
The federal government's November budget projected a deficit of $78 billion for the 2025-26 fiscal year, but as the year wrapped up, the real figure came in around $67 billion.
As a result, the Liberals announced new spending measures they said will build on the previous budget's momentum and position Canada for long-term prosperity.
That included $37.5 billion in net new spending, on measures like suspending the fuel excise tax and introducing the Canada Groceries and Essentials Benefit.
The Carney government pledged $6 billion to help train skilled workers and address the shortage of those in trades needed to build more homes and major projects.
"At this pivotal moment in Canada’s history, we’re charting a course through the fog of uncertainty and global headwinds with strength, determination, and ambition—and building one strong Canadian economy, by Canadians, for Canadians," said Champagne.
Other new measures include the creation of the first federal sovereign wealth fund, which the government says will invest in key, strategic Canadian projects and companies, though few details were provided.
Leader of the Official Opposition Pierre Poilievre said not enough was being done by the Carney government to lower the debt-to-GDP ratio.
"He's added $37 billion of brand-new spending measures in this economic update alone, on top of tens of billions of dollars already announced in the last year," said Poilievre.
"Interest on the national debt will hit $59 billion this year, more than we transfer for healthcare and more than we collect in GST. That means every penny you pay in GST goes to bankers and bondholders, not to doctors and nurses... Every Canadian will spend $3,400 on interest payments."
However, Champagne said they were on track to balance day-to-day operating spending with revenues. Carney previously pledged that the government will only run deficits to finance investments by 2029.
