Ontario Cuts Deficit Projection on Higher Federal Transfers

(Bloomberg) -- Ontario says it expects its budget deficit to be about C$700 million ($559 million) smaller than forecast just a few months ago, as a strengthening economic recovery boosts projected tax revenue and the province receives larger transfers from the federal government.

• The world largest sub-sovereign bond issuer sees its deficit for the current fiscal year ending March 31, 2022 at C$32.4 billion compared to C$33.1 billion estimated in the budget released in March, according to its first quarter fiscal update released Thursday.
• Revenues to rise to C$156.9 billion from C$154 billion previously projected
  • That includes a C$1.95 billion boost from federal government transfers and C$950 million of additional projected tax revenues, which is led by corporate profits and housing market strength
• Projected program expenses to be C$2.2 billion higher than budget forecast at C$175.2 billion
  • “Given the ongoing risks — including the rise of the Delta variant and continued uncertainty regarding the evolution of the public health and economic situation, Ontario will continue to employ this flexible approach by allocating $2.2 billion in new funding towards the Time-Limited Covid-19 Fund”: government statement
• Province’s long-term borrowing plan will be for C$53 billion, down from C$54.7 billion previously expected.

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